Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

Middle East banks to play bigger role  Join our daily free Newsletter

MENAFN - Khaleej Times - 04/01/2014
No. of Ratings : 0
Add to Mixx!

(MENAFN - Khaleej Times) Arabian Gulf banks are set to increase funding to the region's airlines, who have placed a record number of plane orders as part of their expansion plans, according to lenders including Novus Aviation Capital.

Airlines will be a strong driver of borrowing this year as they tap financial markets to cover their large capital expenditure requirements, the banks said. The most popular debt instruments may include finance leases, bonds, Shariah-compliant sukuk, Enhanced Equipment Trust Certificates (EETCs) and debt.

"There is a strong expectation that the region's banks will play an increasing role in financing the region's airlines," Mounir Kuzbari, executive vice-president and board member of Novus Aviation, said by e-mail on December 29.

"There is still a significant surplus of Middle Eastern airline demand for financing over Middle Eastern banks supply, indicating an opportunity for the region's banks to play a greater role."

Credit growth in the UAE will accelerate to 8.4 per cent in 2014, up from six per cent last year and 2.3 per cent in 2012, the International Monetary Fund said in a November 12 report. Airlines Emirates, Etihad Airways, Qatar Airways and flydubai will contribute to that growth after announcing more than 160 billion in combined plane orders at the Dubai Airshow last month.

Middle East financial institutions provided about 4 billion for new Boeing Co aircraft to airlines in 2012 - almost double the figure for 2011, according to the Chicago, Illinois-based manufacturer. Bank debt will provide 25 per cent of financing to airlines around the world as they look to fund 112 billion in jet deliveries in 2014, Boeing said in its annual market outlook report last month.

"The trend is definitely for a more important portion of financing to come from the region," Montasser Khelifi, a Dubai-based senior manager for global markets at Quantum Investment Bank Ltd, said by phone on December 29. "Following the finaial crisis, banks - especially big European banks that were involved in air financing - have shied away from the region and are back to their core markets, so there's an opportunity to replace these."

Sovereign ownership of the major Gulf airlines could help local banks to step up their air financing as some of those lenders are also government-owned, Khelifi said.

"When there is a government-related entity that needs financing, there was always support from the local banks," he said. Emirates sukuk issuance last year involved four local lenders including Dubai Islamic Bank and Abu Dhabi Islamic Bank, while Etihad obtained a 359 million loan from First Gulf Bank in April to buy two Boeing 777s.

Popular financing tools for the region's airlines could include EETCs, bonds specifically to pay for aircraft that aren't yet widely used locally, Sidanth Rajagopal, aviation finance partner at Clyde and Co, said by phone on December 30.

"That's the scene going forward in the next two years - airlines will be looking to access the EETC market and the big three Gulf airlines have the name recognition," he said.

Emirates is considering the sale of sukuk or bonds to raise 4.5 billion in the financial year starting April to fund plane deliveries, Brian Jeffery, former senior vice-president for corporate treasury, said in August. The yield on the airline's 5.125 per cent bond maturing in June 2016 declined 48 basis points last year to 3.01 per cent.

Kuwait Airways plans to finance the purchase of 10 aircraft by issuing bonds or sukuk and through loans from local and foreign banks, its financial consultant Amani Bouresli said in December.

Middle East airlines will need 2,610 new planes worth 550 billion over the next 20 years as traffic grows rapidly in the region, according to Boeing. Local carriers probably made a combined net income of 1.6 billion in 2013, increasing to 2.4 billion in 2014, according to the International Air Transport Association.


Khaleej Times

  MENA News Headlines
 Nov 26 2015 - Turkey- G20 Communiqu: 34The fight against terrorism is a major priority34The Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) Following the two-day summit in Antalya Turkey G-20 leaders released a communiqué calling for greater coordination and information to counter terrorist ...

 Nov 26 2015 - Muslims on 39the front line39 against terror: NATOThe Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) NATO Secretary General Jens Stoltenberg has said it is Muslims who are on “the front line” in the fight against terrorism and extremism. ...

 Nov 26 2015 - Western Balkans 39key to fighting extremism39The Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) The western Balkans is “key” to stemming extremism and terrorism the president of the European Council said Wednesday. Speaking at a summit to ...

 Nov 26 2015 - Turkey- Syrian Turkmen facing 39critical39 period in battleThe Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) Fighting between Syrian Turkmen forces and regime troops is “critical" the leader of the Turkmen opposition said Wednesday. Russian airpower is ...

 Nov 26 2015 - ISIS kills its Austrian 39poster girl39 after she attempts to flee SyriaThe Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) An Austrian teenager who fled to Raqqa Syria in order to join the Islamic fundamentalist terror organization Islamic State was beaten to death after ...

 Nov 26 2015 - Kuwait Spain discuss scientific cooperationKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) KUWAIT Nov 26 (KUNA) -- Kuwait Institute for Scientific Research (KISR) and Spanish Nuclear Safety Council (CSN) discussed means of scientific cooperation and ...

 Nov 26 2015 - Kuwait- KNPC upgrades operations at Al Ahmadi refineryKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) KUWAIT Nov 26 (KUNA) -- Kuwait National Petroleum Corporation (KNPC) announced on Thursday upgrading its Fluid Catalytic Cracking Unit at Al-Ahmadi Refinery so as ...

 Nov 26 2015 - Deputy FM: Kuwait interested in tightening airport security in coordination with BritainKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) KUWAIT Nov 26 (KUNA) -- Deputy Foreign Minister Khaled Al-Jarallah said on Thursday Kuwaiti security authorities are keen to work with the British side for ...

 Nov 26 2015 - Al Tayer affirms DEWA's commitment to support UAE national identityEmirates News Agency (WAM)
(MENAFN - Emirates News Agency (WAM)) DUBAI 26th November 2015 (WAM) -- Saeed Mohammed Al Tayer MD and CEO of Dubai Electricity and Water Authority DEWA has affirmed DEWA's commitment to ...

 Nov 26 2015 - UAE- YFEL Led Solar Energy Project with Masdar Collaboration Comes Online to Help Power Rashid Abdullah Omran HospitalEmirates News Agency (WAM)
(MENAFN - Emirates News Agency (WAM)) ABU DHABI 26th November 2015 (WAM)--Masdar has completed a 543 KWp photovoltaic (PV) solar power project that is to deliver renewable energy to the Rashid ...




Click to Apply


Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Economic Calendar
Financial Glossary

Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help