Bank PHB acquires Spring Bank

Nigerian Bank PHB acquired Spring Bank following the fulfillment of all the conditions of its offer. The N21 billion bid was on the bac of its initial stake of 33 percent in Spring Bank which.

The takeover and the injection of management into Spring Bank plc, should arrest the latters decline. Bank PHB has delivered a far better return to shareholders in the last three years.

Renaissance Capital writes that Bank PHB’s acquisition of Spring Bank is not only a good deal for Bank PHB and Spring Bank’s shareholders but also for customers, regulators, and employees. The new bank will have an expanded distribution network and extended product offerings

Will Nigerian banks continue their foreign expansion?

The diversification of Nigerian banks out of its own borders using their strengthened balance sheets may be slowing due to the credit crisis. Ten out of the 24 licensed commercial banks in Nigeria now own at least one full-fledged licence in a foreign country. They are First Bank of Nigeria, FBN, Union Bank of Nigeria, UBN; Bank Intercontinental; Access Bank; Platinum Habbib Bank; Bank PHB, the United Bank for Africa, UBA, Guaranty Trust Bank, GTB, Zenith Bank, Oceanic Bank and FinBank. Nigerian bankers are breathing a sigh of releif that they came late to the international leverage party and are now re-evaluating their strategy.

The trend to own international branches was started by the problems Nigerian businesses have in transfering money internationally following clamp downs on international money laundering. This will not go away. By opening branches, the banks faciliated the acquisition of property and eliminated the cost of engaging a correspondent bank.

Perhaps now, the bank will use their balance sheets to domestic finance the oil and gas sector!

KenGen to build new plants

KenGen’s is to build a USD 460 m coal plant in Mombasa. The facility will be 300MW

Plans are also underway to add a third unit of 35 MW to the 70 MW Olkaria II Geothermal Power Plant. This emanated from the excess steam available in both Olkaria II and Olkaria I geothermal fields. The World Bank has already approved the funding for the project.

Kuwait credibility on the line

The Kuwaiti decision to refer the Petrochemical Industries - Dow Chemical joint venture to the Fatwa and Legislation Department threatens its cancellation. The project has become a micocosm of Kuwaiti politics. There is serious friction between the parliament and the cabinet. At the same time, the political and economic outlook for Kuwait is weak. There is disappointment in Emir Sabah's failed efforts to implement reforms.

As far as the Petrochemical Industries - Dow Chemical joint venture goes, the whole Kuwaiti business environment is concerned about an undermining of the concept of contract sanctity. Still, the Kuwaiti government is confident that the deal will move forward, especially since it considers that all the financial concerns expressed by the parliament have been addressed.

Republic of Gabon Eurobond delays payment

The Republic of Gabon delayed the interest payment on its 2017 Eurobondby for one week. The action follows a dispute with CECF Transgabonais. Gabon has a history of late debt service payments.

The dispute is over a contract which CECF Transgabona had to manage the national rail system, but was withdrawn five years ago.

Saudi Arabia cuts interest rates 50bps

The Saudi Central Bank reduced its benchmark repurchase rate to 2.5 percent from 3 percent and lowered the reverse repurchase rate to 1.5 percent from 2 percent today. This follows 2 1/2 percentage points of cuts since Oct. 30.

Aviva Corporation's merger with Northern Energy Mining Inc. scrapped

Botswana's Aviva Corporation's proposed merger with Northern Energy Mining Inc. (NEMI) has been cancelled following the discover of 'errors' realised in the books of Northern Energy. It was Nothern Energy who advised Aviva that errors in determining its partners' historical cash calls at its Peace River Coal Limited Partnership had effectively reduced what it believed its particpation was in the venture, thereby making them worth substantially less than was thought.

Equador defaults

Suppose it is about time someone defaultd. President Rafael Correa made his country the first Soveriegn in the current credit crisis to announced that the government will not make payments on some of its bonds. Specifically, the $30 million coupon on the 2012 bonds. The 2012, 2015 and 2030 bonds, with a nominal of $3.86 billion, will alos default.

The Equadorian government will present a debt restructuring proposal which we expect will result in a substantial haircut for investors!!! The government is likely to have a fight on its hands as the country is not short of funds to pay the interest...

Nigeria currency slide worsens

The weekly auctions and uas of the reserves have failed to stabilize the naira. The Nigerian Central Bank has ordered the country's banks to reduce foreign exchange positions to reduce local demand for dollars.

Kenya government announces share sales

Kenya’s government plans to sell sharesin National Bank of Kenya Ltd., East African Portland Cement Co. Kenya Pipeline Co., Consolidated Bank, the Development Bank of Kenya and Kenya Electricity Generation Co. It will also sell shares in five sugar companies.

Volume up after Eid holiday in Oman

The Muscat Securities Market opened for trading after Eid Al Adha holidays on substantially increased turnover. The number of shares traded increased by 56.4 per cent based on 38 traded securities.

The market was weak but AES Barka rose 3.5 per cent and Oman Cables Industry rose by 2.3 per cent.

Botswana suffers from diamond price collapse

Demand for diamonds, Botswana’s principle export, has forced the well run country's Finance Ministry to fall back on its USD 10.2 billion reserves. With inflation at 13.1% the country will no longer remain isolated from the global credit crunch.

OPEC

It apears that OPEC is reaching out, in desperation at the current oil price, to Russia. It has asked Russia to consider a cut of 300,000 barrels a day. If Russia joined OPEC, the oil price would certainly react. Indeed, Dmitry Medvedev has said Russia may join 'suppliers organisations' in the future.

Update on our (outsourced) back office

Close followers of Danfonds will know that it has outsourced its back opperations to GlobeOp Financial Services S.A., a leading independent provider of business process outsourcing, financial technology services and analytics to hedge funds and asset
managers. In view of the turmoil in financial markets, we though it useful to highlight their financial stregth, as announced for the year ending 31 December 2008.

$95 billion in Assets under Administration¹ (AuA) as at 30 November 2008
$1 billion of new client assets anticipated in December
Strong balance sheet with $47 million in cash as at 30 November 2008 and no debt

Aldar Properties PJSC and Sorouh Real Estate PJSC rated buy by Citigroup

Looks like there are some property bulls left. Aldar Properties PJSC and Sorouh Real Estate PJSC, Abu Dhabi’s biggest developers, have been rated “buy” by Citigroup Inc. The rationale for the recommendation is that they trade at a discount to their net asset value. Citigroup estimated Aldar’s net asset value per share at
16.6 dirhams and Sorouh’s at 5.6 dirhams.

Citigroup argue that the current share prices of Aldar and Sorouh imply a property price collapse, zero developer margin and no future low-cost land grants.

Orascom Telecom starts operations in North Korean

Orascom Telecom surged 11.11 percent on the news that it would begin operations in North Korea. As a market, North Korea has one of the lowest telecom penetration rates in the world, hence the excitment. That said, part of the jump in Orascom could simply be bottom fishing, as the stock has fallen a staggering 74 percent this year!

Mood in the Gulf

With oil prices at levels below $50 a barrel, further weakness in the Dubai real estate market, as well as general concerns over public and private debt levels, it is not surprising the mood remains depressed in the Gulf. That said, Kuwait's court order to close its market for a day, and the Kuwait Investment Agency cash injection, have helped; as indeed did the Saudi Arabian announcements on the soundness of its fiscal position.

Borse Dubai struggling with its financing of OMX acquisition

Borse Dubai is in talks with HSBC and other banks to fund a syndicated loan to refinance the $3.78 billion loan it took to acquire Nordic exchanges group OMX jointly with Nasdaq.

The original financing, agreed in March matures on Feb. 28 2009. Difficult credit conditions will make it hard and or costly to raise such an amount. Borse Dubai may have to pay up over 450 basis points over LIBOR with a maturity of just one year.

African currencies

Year to date movements against USD.

Nigeria naira -7.8%
Kenya shilling -18.6%
Ghana cedi -21.0%
CFA franc -11.6%
Morocco dirham -9.7%
Mauritius rupee -12.8%
Botswana pula -24.4%
Zambia kwacha -20.9%

Angola

Angolan reforms are slowly improving and diversifying the economy. Deployment of a $1billion World Bank loan to aid in diversification, and establishment of two funds to collect oil revenues should keep things bouyant. The banking sector is looking interesting.

GDP growth of 11.8% in 2009, down from 15% in 2008. One single company, Sonangol, which has a turnover of $17 billion, represents almost a third of GDP. Sonangol takes a 51% stake in all production from Cabinda, as well as from offshore concessions.