Sunday, 31 January 2010

Saudi Emaar SAR 5 Billion (US$1.3 Billion) Loan from Saudi Ministry of Finance

Reuters reports that Saudi Emaar will receive a SAR 5 billion loan (US$1.3 Billion) from the Saudi Ministry of Finance for its King Abdullah Economic City project.   KAEC is a SR 100 billion (US$26.7 billion) mixed use city to be built north of Jeddah.  

Emaar Economic City, listed on the Saudi Tadawal, (Symbol #4220) is the developer of the project.  This entity reportedly will get the loan.  As of its preliminary 31 December 2009 financials, EEC did not have any significant loans.

The loan is being described as designed to help speed up construction and delivery of the project.  I'd guess with a project this size there are bound to be delays.

What isn't clear is if this loan is an indication of difficulty for the project in accessing finance (Dubai World fallout, general trends in the area)?

Or whether this loan had been planned from the start and is just being announced now?

Knowing the answers to these questions would be a highly useful insight.  I am guessing it is the former.

Saudi Zain Foreign US$500 Million to US$600 Million Loan - What's Behind the News Item?


Kuwait's Al Anba'a newspaper reports that Zain is in discussions with non regional banks for a loan of between US$500 to US$600 million to finance the development and extension of the network of Saudi Zain in the Kingdom.  The reason for the recourse to foreign lenders is ascribed to "tight" lending conditions in the GCC.  You've probably seen all this reported elsewhere.

But, there's an element to the story that you haven't probably seen.

The "bit" that many news reports have left out is that the negotiations are being facilitated by equipment suppliers to Zain.  Most of whom are European.  And thus the assumption is that the banks involved are European.  

Does this indicate anything about Zain's financial condition?

As mentioned above, the ostensible reason for the recourse to foreign lenders is that local banks are imposing very complicated conditions and requirements for guarantees due to market conditions and due to tighter supervision by central banks.  The unspoken sub-theme is that the credit of Zain is sterling.  But that its access to financing has fallen afoul of external conditions.

No doubt lending conditions are tighter in the GCC.   Lots of distress with AlGosaibi, Saad, Dubai World has probably focused previously unfocused minds.

Unmentioned is the simple fact that Zain Saudi has not turned in stellar performance.  Also unmentioned is that it did not make the EBITDA earnings target covenants under its existing loan.  Or that existing lenders on that facility had to grant a waiver to remedy an event of default. 

Any foreign lender should exercise caution when it is told that the local banks don't understand the credit, aren't as sophisticated as the foreign bank, are over reacting  to market difficulties, or under pressure from allegedly strict regulators.  While it is nice to be told that one is smarter than others,  sometimes a "great" opportunity to take advantage of others' lack of sophistication and nerve is not so great after all.    

If a prospective lender also notices that the borrower needs to enlist help of others to secure financing, that may also suggest additional caution is prudent.  If the borrower cannot find any banks who "know" it who are willing to lend (and note the article says that negotiations with local banks for financing this new loan have stopped), then could be another red flag.  Having said this, once a firm I was with extended a financing offer to a prospect whose lead bank was unable to providing financing, though this was a skill set deficit not a credit issue.  We then became the lead bank.

Equipment suppliers have a keen interest in moving their merchandise.  And to the extent they can lock in a buyer to their equipment or increase "switching costs", all the better.  When their customers can't raise financing on their own, suppliers first turn to other sources of credit, e.g., export credit agencies, and financiers they know.  Often leaning on those sources to do the deal, explaining just how important it is to them and promising they won't forget.   Sometimes, as a last resort, they will even take the receivables on their own books.  During the "Asian Century" (which if I remember correctly began in the early 1990's and abruptly ended in 1997, though I believe it may have restarted again in 2009) one French and one US supplier found themselves later to their financial chagrin with a lot of duff receivables - which may in part have motivated a merger.

Another bit of information in the article which may be an indication of distress (though it need not necessarily be) is the statement attributed to the CEO of Zain Saudi, Saad AlBarak, that Saudi Zain was not "rescheduling" its existing murabaha loan but merely "refinancing" it.  

A refinancing certainly sounds much better than a rescheduling.  A rescheduling implies all sorts of problems.  A refinancing, well that's just the rollover of a great asset.  

The devil is as usual in the details.  If the existing lenders were to say "no",  is the alternative a rescheduling? Are there any new lenders ready to step up and "take out" some or all of the existing lenders?  Sometimes when a bank is stuck in a credit, it "refinances" rather than "reschedules" because reschedulings raise all sorts of  messy problems.  First, there is the need to report restructured loans under IFRS.   Auditors may insist on impairment tests.  Provisions may become necessary.  Second, as a general rule, Central Banks get nosy about rescheduled loans and start asking about provisions as well.  Third, equity analysts may form unfortunate conclusions if restructured loans increase.  Something one might want to avoid if one faces other loan problems.  Fourth, clients and depositors may get nervous.

And sometimes a refinancing is just that - bankers renewing a performing asset that they are happy to have on their books.

So, to be clear, all of the above do not prove there are serious problems at Saudi Zain.  

What they do suggest, however, is that a closer look at the company is warranted.

GCC China Economic Forum - Inaugural Meeting Bahrain 23-24 March


The GCC-China Economic Forum will hold its inaugural meeting this March 23-24 in Bahrain under the patronage of Bahrain's Prime Minister, HH Khalifa Bin Salman Al Khalifa.  Among the topics for discussion is the finalization of Free Trade Pact talks.

Trade and economic relations between the PRC and the GCC states are increasing.   Something that is in the political and economic interests of both sides.  Something that gives both sides greater options vis-a-vis certain other powers in the Western end of the Eur-Asian continent and in the Americas.  An earlier observation here

Saudi Supreme Court Stands Up for Treatment of Women According to the Shari'ah

Copyright The National Newspaper Abu Dhabi

Once again the Custodian of the Two Holy Mosques' intervention rights a wrong

As a result, Saudi Supreme Court takes a firm stand overturning taqlid from the Jahiliyya.

The National Newspaper Abu Dhabi "Beauty Queen Dazzles the Judges"

 Copyright The National Abu Dhabi
A long, slender neck, full lips, a well-shaped nose and long legs – Ruwayda had all that, and then some.

Sporting long, curly lashes, a full hump and even spacing between her toes, the one-year-old purebred Omani Asayel finished first in the beauty pageant at the Al Dhafra Camel Festival which began yesterday.

I just couldn't resist.  The article not the camel.

Dishonest Taxi Drivers

In reading this story, I am reminded of the story of the Prophet Shu'aib who God sent to the People of Maydan.  I don't see any exemption for taxi drivers from the strictures of the below ayya  (7:85) as I have pointed out on more than one occasion to a rapacious taxi driver in one of the GCC states.   

BD151 for a short ride is really beyond the pale.   Looks like Discover Islam may just have discovered some constituencies in need of the دعوة‎ , though they shouldn't forget the manifest need for some preaching in the court system as Ms. Zaid recently noted.

باسم الله الرحمـٰن الرحيم

صدّق الله العظيم

Saudi Capital Market Authority SAR278 Million (US$74.2 Million) in Penalties and Fines re 2006 Trading in Tihama Shares

The Saudi CMA announced today (30 January 2010) that the Appeals Committee for Disputes in Securities had issued its final judgment upholding the levying of penalties and fines in the aggregate amount of SAR278,122,905 (US$74,166,108) against several individuals for trading in the shares of Tihama Advertising and Public Relations Company (Tadawul #4070) during the period 23 July 2006 through 19 August 2006.  The penalties are composed both fines and return of illegal gains on the trades.  Of the two amounts, as you might expect, the disgorged profits are more substantial - 99.8% of the total to be precise.

These are I believe record penalties imposed by the CMA.  

The Appeals Committee upheld the following earlier findings and penalties:

First, that Muhammad Bin Nasir Bin Jarallah Al Jarallah violated Paragraph "و" ('waw") of Article 30  of the Saudi Capital Market Authority's Listing and Trading Rules and the imposition of a fine of SAR100,000. (US$26,666.67).  (This Article requires that anyone with 10% or more of the shares in a company may not trade them without CMA approval.  The standard is not only direct ownership but also an interest in the shares.  Debt securities or debts capable to be transformed into voting shares are also subject to this Article.)

Second, the trading violations of each of Jarallah Bin Muhammad Bin Nasir Bin Jarallah Al Jarallah, Said Bin Muhammad bin Nasir Al Jarallah, Fa'iz Bin Salih Bin Abdullah Bin Mahfuz (Mahfuth) as agents for the portfolios of Muhammad Bin Nasir Bin Jarallah Al Jarallah and to return illegal gains in the amount of SAR90,142198.89 (US$24,037,919.17) to the CMA.

Third, confirmation of the violation of each of the three individuals mentioned in #2 (Jarallah, Said and Fai'z) with contravention of Article 49 of  the Capital Markets Law and Articles 2 and 3 of the Rules of Market Conduct.  (All of the regulations cited deal with market manipulation, false trades etc.  Article 49 also deals with insider trading).  The following are the consequential regulatory actions:
    1. Jarallah Bin Muhammad Bin Nasir Bin Jarallah Al Jarallah to pay SAR142,844,770.38 (US$38,091,938.79)  in illegal gains to the CMA.  
    2. Said Bin Muhammad bin Nasir Al Jarallah to pay SAR26,088,174.83 (US$6,956,846.62) of illegal gains to the CMA.
    3. Each of Jarallah Bin Muhammad Bin Nasir Bin Jarallah Al Jarallah, Said Bin Muhammad bin Nasir Al Jarallah, Fa'iz Bin Salih Bin Abdullah Bin Mahfuz (Mahfuth) to pay a fine of SAR100,000.  A total of SAR300,000 (US$80,000).
    4. Each of Jarallah Bin Muhammad Bin Nasir Bin Jarallah Al Jarallah, Said Bin Muhammad bin Nasir Al Jarallah, Fa'iz Bin Salih Bin Abdullah Bin Mahfuz (Mahfuth) prohibited from (a) trading in shares listed in the Saudi Stock Market (Tadawul) and (b) working in companies whose shares are traded in the Tadawul for three years.
    Fourth,  that Abdul Rahman Bin Abdul Muhsin Al-Muajil assisted  Fa'iz Bin Salih Bin Abdullah Bin Mahfuz (Mahfuth) the violations.  He is subject to the same three year ban on trading and working as described immediately above.  As well as a SAR100,000 (US$26,666.67) fine.

    Fifth, that Jarallah Bin Muhammad Bin Nasir Bin Jarallah Al Jarallah engaged in illegal activity with the portfolios of Nasir Bin Muhammad Bin Nasir Al Jarallah and that he pay SAR18,547,761 (US$4,946,069.60) to the CMA.
      As mentioned above, not only is this I believe a record fine for the CMA but the scope of the profits made in roughly one month is truly remarkable.   If you go to the Tadawul website to Tihama's page and look at historical data (hopefully this link will work) you'll see a Burj Khalifah like spike in trading volume in the latter half of 2006 just around the time the individuals named above were allegedly engaged in their manipulation.  For those who don't read Arabic, the scale on the left hand side of the chart is millions of shares.  The scale on the right hand side the price per share in SAR.  SAR3.75 = US$1.00

      Saturday, 30 January 2010

      Ring in the Old: Part 2: Suq Al Manakh The Crash

      Symbol of the Suq Al Manakh

      The Crash

      When we left the Suq Al Manakh ("SAM") everything was going well, or so it seemed.  (Earlier post here). There was one worrying sign though, the premium on the deferred sales (post-dated checks) had climbed to 400% per annum.

      In August 1982, a nervous or perhaps savvy investor (by some accounts a woman) presented a post dated check early. There was nothing under local law which required that the check be held until the future date. The check was due. The writer could not cover. Word got out. Panicked investors started presenting checks for payment ahead of their due dates. The entire house of cards came tumbling down. With a resounding crash.

      Most of the stories you'll read about the wreckage of the SAM involve very large amounts. You'll hear that there were some 29,000 (I've seen, or think I have, the figure of 28,815) or so unpaid and apparently unpayable post dated checks issued by 6,030 or so investors totaling KD 26.7 billion (roughly US$94 billion dollars). And that was when a billion dollars was real money.  In 1984 Kuwait's GDP was US$21.7 billion. It didn't reach US$94 billion until 2006 when it surpassed that figure by US$7 billion.

      The KD 26.7 billion is mind boggling, but it is the total of all the checks added together. If Investor Jawad owes Punter Jassim KD15 billion and Punter Jassim owes Investor Jawad KD14 billion, the real debt between the two is KD1 billion not KD29 billion.

      There was significant concentration among the traders:
      1. 18 traders were responsible for 95% of the amount. 
      2. Some 8 of these traders (the so-called Knights or the Manakh, Fursan Al Manakh) were responsible for approximately 55%.
      After the Government established a clearing house for the SAM post dated checks and netted bi-lateral deals against one another, the net amount outstanding was KD5.7 billion (US$20 billion). Still enormous in terms of Kuwait's GDP, but only about 21% of the original amount.  And cold comfort as five of Kuwait's six operating banks were bankrupt with uncollectable loans more than twice their equity. The one bank that escaped this fate, due to the prudence of its management, was the National Bank of Kuwait.

      The Government's Rescue Plan

      As you'd expect unwinding a problem this big was not easy. Nor was it accomplished quickly.

      The first step was the passage of Law #57 in October 1982 which established:
      1. A clearinghouse company to determine each trader's position after the process of conducting a bi-lateral netting of his obligations and receivables from each other trader. The first step in this process was reviewing, verifying and tabulating the payables and receivables of each trader. This process involved comparing Trader A's record of payables due to and receivables due from Trader B to Trader B's records of his dealings with Trader A and then determining the true position. 
      2. A small investors' fund of KD261 million (US$1.7 billion). A small investor was someone with a loss less than KD261 thousand or US$1.7 million. Small investors were compensated for their losses. The first KD100,000 in cash. Amounts over that in Government bonds (I think six year tenors). 
      3. An arbitration panel to assist traders in working out settlements, including the schedule of payments, and as well monitoring these payments. 
      4. September 20, 1982 as the due date for all checks. This was done so that all obligations "matured" on the same date and all premium charges stopped as of that date. Initially the original premium (interest rate) agreed between the buyer and seller on each postdated check was retained with the only adjustment in the amount of the check being the truncation of the premium (interest) accrual on this date (20 September 1982).  Later the premium was reduced to no more than 25% per annum.
      At this juncture the Government faced a difficult choice. Did it enforce the law on checks written against insufficient funds? To do so would mean the jailing of a large number of Kuwaitis with all the  societal and economic stresses and strains that would cause. The answer was no. The law was suspended.

      The plan was that each trader would pay 100% of his net debt. A position some attributed to the influence of the then Minister of Finance and Planning, Mr. Abdulatif Yousuf AlHamad., who was reportedly adamant about the dangers of bailouts.   

      Not many traders settled their debts over the next 12 months. The arbitration panel began to take legal action against some of the defaulters. Not unlike other jurisdictions in the region, the bankruptcy process is a long and difficult one. There were rather dire societal implications to taking this action  on a widespread basis as well as the crushing burden this would place on the courts.

      So in April 1983, the Government looked for a new way. The first step was the creation of the Office for the Settlement of Deferred Share Sale Transactions. The office was to design and then implement a way for the settlement of the debts. Around this time, Mr. AlHamad left his position as Minister of Finance and National Planning. The Government then adopted a plan to resolve the aftermath of the Suq al Manakh through a debt settlement program that was not predicated on 100% repayment of debts.  

      The idea was that each individual involved would pay according to his ability. Determining that ability would be through the calculation of a Debt Settlement Ratio ("DSR") for each investor. The DSR was the ratio of assets (cash, real estate, shares, and amounts due an investor from post dated checks) to his liabilities (the checks he had written, loans taken from banks, etc.)

      An elegant, simple concept. But practical implementation was extremely difficult.

      After the operation of the small trader compensation fund about 370 traders were left whose debts had to be settled.   But there was a very important complication:  Trader A's DSR was dependent on what his counterparties could pay him. That is, what amount of the face value of the post dated check in his favor he would receive.  His counterparties' ability to pay him depended on what their counterparties could pay them. If that wasn't complicated enough, many of those counterparties' ability to pay would depend on what Trader A paid.  And that as outlined above was dependent on what he was paid.  Even with the number of investors reduced to around 370, figuring all this out posed quite a challenge.

      The Government turned to the Kuwait Institute for Scientific Research and some bright academics there came up with the idea of running a linear program. (Yes, that math you may have learned in business school does occasionally prove relevant in real life).

      After a crude first pass, the 370 were divided into four groups: 
      1. Bankrupt with No Payables from Other Investors
      2. Bankrupt with Payables from Other Investors
      3. Possibly Solvent (depending on the outcome of the LP exercise), and 
      4. Definitely Solvent. 
      The LP was run in batches for each of these groups.
      The 18 names responsible for 95% of the trading were definitely bankrupt. And were the first whose DSR was calculated. DSR's were published in the newspaper. My mentor recalls seeing an article in AlQabas (where else?) listing the 18 and their individual DSRs. It took another two years to calculate the remaining DSRs.

      At the time there was speculation that not everyone had disclosed all his assets. It is not uncommon in this part of the world as elsewhere that nominees (either trusted individuals or companies or trusts) hold assets to shield the identity of the true owners. Of particular concern were assets outside the State of Kuwait.

      About one year after the last batch of DSR's were calculated, the Council of Ministers approved broad settlement outlines. Debtors were divided into two groups. Those with income producing collateral and those without. Those with got up to 15 years rescheduling with 0 to 7% interest. Those without 10 years and 0% interest.

      There was not a great rush to settle debts. The unsettled burden of the SAM weighed on Kuwait's economy along with other factors. After the Iraqi invasion/occupation of Kuwait ended in 1991, a new tack was chosen. To aid in the recovery of the country which had suffered from the Iraqi invasion plus the lingering effects of the SAM crisis, in 1982 the Government bought up all "difficult" debts outstanding as of 1 August 1990 (the date of the Kuwaiti invasion) against the issue of Kuwaiti Government bonds. These included the unpaid Suq Al Manakh debts.

      In 1993 the Government set the repayment terms for the debt it had assumed. This was followed by several further steps to give discounts for early payment of the debt, etc.   It appears from the news item about Mr. Bu Khamseen that some of these debts may still be in the process of being paid. 

      Endnote:  This account of the Suq Al Manakh is not meant to be a definitive study. It is not based on original government sources nor on the accounts of insiders.  Much of it is drawn from recollections of those who worked in the area at the time supplemented with some additional written sources.

      Lebanese Shaykh Kidnaps Himself - Lebanese Police Rescue Him

      You've probably read the stories that Sunni Shaykhh from Majdel Anjar, Lebanon  (pictured above)  was kidnapped by mysterious unknown assailants assumed to be from another sect.  (Majdel Anjar is in the Beka'a near Anjar).

      Outraged residents of his village blocked the road to the Syrian border to protest his abduction and to demand his rescue.

      The pan-Arab daily Al-Hayat (owned by Saudis) reported on Thursday that Majzoub had been in dispute with radical groups in the nearby village of Kamid al-Loz dating back to the time when he was the imam of that town. The dispute made him leave to settle in his hometown of Majdel Anjar, the report said. 

      More recent news has emerged.  

      The kidnapper has been  identified.  As suspected it turned out  it was one of the members of the  radical ...   

      Well, no, actually it turned out the "Shaykh" had staged his own kidnapping hoping to secure sufficient ransom to repay his debts.

      Luckily he was rescued before his kidnapper could do him severe bodily harm.  Though as Lebanon's Daily Star reports not completely unharmed:  "But police found Majzoub, who is in his 20s, in a house near Majdel Anjar on Thursday night, with his beard and hair shaven off but otherwise unharmed. "

      Davos: What Is the "New Normal" for Global Growth?

      An interesting discussion from Davos.

      Click on the following,  What Is the "New Normal" for Global Growth?

      S&P Final Rating on Emirates Bank International and National Bank of Dubai

      Earlier this week, Emirates National Bank NBD announced that it was terminating S&P's rating services.  The market assumption is that this was in response to S&P's downgrade of DHCOG and the rather negative comments S&P made about DHCOG and transparency in the local market.

      Whenever a rating agency stops rating an obligor or an issue, it updates its view on the ratings of that entity so that it leaves the market with an accurate read of its credit opinion.

      Today S&P reaffirmed its ratings of BBB/A-2 (long term and short term respectively) for Emirates Bank International and National Bank of Dubai with negative outlooks on both  At this point both EBI (which was formed from the rescue of several failed or near failed banks in Dubai) and NBD (which was the previous Ruler of Dubai's personal bank and which was run very conservatively but a canny old Scot at one time) have merged to form a new bank, Emirates NBD.  

      The ratings of the two banks benefit substantially (three notches to be precise) based on the assumption that as a systematically important bank, ENBD would receive extraordinary support from the UAE authorities (meaning the Federal Government and the Central Bank of the UAE). Other positive factors were the bank's leading commercial position and its adequate preprovision earnings capacity.  On the negative side were depressed financial conditions in Dubai and high exposure to weakened Dubai government related entities.

      ENBD has some AED 7 billion (US$1.9 billion) of debt maturing in 2010. 

      As of 30 September 2009, the bank had total assets of AED291 billion (US$79.3 billion), equity of AED 32.2 billion (US$8.8 billion) and medium term debt (bonds and syndicated loans) of AED25.7 billion (US$7 billion).  When adjusted for debt payments due in 4Q09, the adjusted medium term debt total is AED23.4 billion (US$6.4 billion). 78% of that amount matures in the period 2010-2012 as follows:  AED7 billion  (US$1.9 billion) in 2010, AED3.5 billion (US$1 billion) in 2012 and AED7.8 (US$ 2.1billion) in 2013.

      Gulf News Dubai Advises "Responsible Borrowing Is Now The Way To Go"

      What can one say when confronted with a headline like this?

      I thought responsible borrowing always was the way to go.

      Apparently not.  At least in certain places. 

      Anyways it's reassuring to learn as GN says "Even banks have promoted responsible borrowing, urging UAE residents to only borrow what they require and can afford to repay".  Since banks are in business to collect the principal and interest on the loans they make, there is a bit of enlightened self-interest at work here.  The nagging question is earlier were the banks promoting irresponsible borrowing?

      This is, I suppose, also sound advice not only for individuals, but also corporations and governments.  Hopefully those latter parties have a print subscription or Internet access.

      Finally this comment is just flat out wrong:  " If you have investments somewhere, it would be safe to borrow up to 70 per cent of the value of the investments".  

      The borrowing base of an investment or any asset depends on the nature of the investment/asset, what sort of cashflow it has,  how liquid it is and how sensitive its value is to market movements - among other factors.  There is no fixed "safe" percentage. 

      The purpose of the loan is also something to reflect on.  If you're borrowing to build an indoor mountain range as opposed to say a factory or hospital, it might be a good time to "think again".

      Friday, 29 January 2010

      Zawaya/Hawkamah Report on Sukuk


      Zawaya and Hawkamah have teamed up to produce a 130 page report on the Sukuk market.  You can get your copy by registering here.

      The report contains articles on a variety of topics as well as numerical analysis of the state of and trends in the Sukuk market by Ernst and Young.

      One very interesting section is on the core weaknesses in the Sukuk market.  I think that is where the prudent investor should begin as understanding risk is the key to a good investment decision.  

      One article in that section that caught my eye was a discussion by two attorneys from Vinson and Elkins on some of the legal issues associated with sukuk structures and default:
      1. "In conventional finance and investment markets, the post-default path is well worn. For this reason, much of the process of structuring and documenting transactions, particularly in common law jurisdictions, accounts for the possibility of a worst case scenario. Precedents indicating what such a scenario may entail are readily available in the context of conventional transactions. The same cannot be said for Islamic transactions."
      2. "Another factor contributing to the uncertainty surrounding post-default Sukuk is that many are subject to partially or wholly non-Shariah based legal regimes."
      I had written earlier on this topic (here and here and here).  It seems we share some of the same legal concerns.

      Cast A Cold Eye

      Abu Dhabi Commercial Bank AED 9 Billion (US$2.45 Billion) Exposure to Dubai World

      Alaa Eraikat, CEO of ADCB, has disclosed that the bank has about AED 9 billion (US$2.45 billion) in exposure to Dubai World "about half of which are supported by collateral and income streams from infrastructure and other projects".

      As of yet, ADCB has not taken any provisions on Dubai World because the loans are still performing.

      He also noted:  “This is what I tell you makes a big difference [and explains] why we feel comfortable here [with our Dubai World exposure] rather than the lending to Saad and Gosaibi.”  Wise words indeed.

      And that of the AED2.1 billion (US$572 million) in 4Q09 provisions, roughly one half were for Saad and AlGosaibi leaving about AED900 million (US$245 million) of exposure to these two companies still on the books.

      The bank also provided AED700 million (US$190.7 million) against its AED 1billion (US$    million) of "foreign investments in special investment vehicles and credit default swaps in the US".  Mr. Eraikat said that the remaining AED300 million might also "potentially turn toxic".

      Two comments:
      1. At 30 September 2009, ADCB had roughly AED20.1 billion in equity.  It's exposure to Dubai World is roughly 45% of equity.  That seems a rather high percentage. 
      2. Ambition unaccompanied by intellect is a recipe for disaster.

      On the Other Hand Some Do Attend Davos


      HH Salman Bin Hamad Al Khalifah, Crown Prince of Bahrain.

      Thursday, 28 January 2010

      Davos: When the Going Gets Tough, The Tough Stay Home

      First we have this headline from The Wall Street Journal  "Dubai Sheiks to Dodge Davos Spotlightwhich contains this absolutely delightful quote.  Par for the course?

      Ahmed Al Sheikh, the head of a new media affairs unit set up earlier this month to coordinate the emirate's communication's strategy with the press, was unreachable for comment and didn't reply to phone messages.

      And then again it could just be part of a new focus on expense control.  No unnecessary trips.  The Wall Street Journal did describe it as an "annual jamboree". And I suppose no unnecessary international phone calls on the Company's dirham.

      But it's not just shaykhs who are staying home and off the panels as speakers.  A lot of bankers from struggling institutions have demurred as well.  You know those tough titans of finance.  The ones who are not afraid of  rugged competition.  Yet they are apparently possessed of delicate sensibilities after all.

      Kuwait Stock Exchange Warns AlAbraj Holding on Trading Suspension If Financials Not Provided by 31 January

      The Kuwait Stock Exchange issued a public warning today to AlAbraj that if it did not produce its fiscal year statements (AlAbraj's fiscal year ends 31 October), it would be suspended from trading.

      The Company is involved in a legal case with Boubyan Bank over its non payment of KD45.2 million of debt. This is an indication of significant financial issues at the company which are no doubt responsible - at least in part - for the delay in release of its financials.

      Here's the text (Arabic only) of the KSE announcement.

      [14:27:1]  ِ.تذكير (ابراج) الالتزام بقرار لجنة السوق رقم(16)‏
      يعلن سوق الكويت للأوراق المالية واستنادا الى قرار لجنة السوق رقم (16)‏
      لسنة 1987، والذي يلزم كافة الشركات والصناديق المدرجة بتقديم البيانات
      المالية السنوية في موعد أقصاه ثلاثة أشهر من تاريخ انتهاء السنة المالية،
      فانه وفقا للقرار المذكور على كل شركة مدرجة في السوق الالتزام ‏
      بتقديم بياناتها خلال المدة المذكورة اعلاه ، وحيث ان شركة الابراج القابضة ‏
      ِ(ابراج) تنتهي السنة المالية بتاريخ 31-10-2009 واستنادا للمهلة المذكورة ‏
      اعلاه فإن اخر يوم للاعلان عن هذه البيانات المالية هو يوم الاحد ‏
      الموافق 31-01-2010 .‏
      وبنائا علية فإن ادارة السوق سوف تقوم بوقف التعامل في اسهم هذه الشركة في ‏
      حال عدم تقديمها البيانات المالية السنوية في الموعد المحدد .‏


      On to Sunday and Man U.

      Sensible Advice: Islamic Finance Not Necessarily Safer Than Non Islamic

      Philip Thorpe Chairman and Chief Executive of the Qatar Financial Center Regulatory Authority gave an interview to Reuters at Davos.

      Some times the truest statements are the most elegantly simple.

      Philip had two.

      Here's the first.
      It's a myth to assume Islamic finance products are safer than conventional products and underlying risks should be studied more carefully, Qatar's top regulator said on Wednesday.
      I guess that here at Suq Al Mal that's the equivalent of preaching to the choir.  Thinking Islamic products are safer than conventional ones is on a par with thinking that if my borrower's name is Muhammad he's more likely to pay me back than if his name is Ganesh.

      And as I commented before these structures have not been rigorously tested in courts and because of their need to incorporate asset backed elements into their structures may pose some significant legal challenges.

      Here's the second:

      The role of regulators is to identify risks and in some instances to become a bit more interventionist," he said.

      "If we saw a product that was unsafe for investors, we would not permit it to proceed. Regulation has never been about free markets. Regulation is not a consensual act. It's a political act...Recent events may have moved the bar up in terms of regulator tolerance."
      It is so refreshing to see a regulator who doesn't feel he has to apologize for regulating markets. And understands that regulations and regulators are needed because the market is not perfect.

      Wednesday, 27 January 2010

      The Emirate Strikes Back: Emirates Bank NBD Drops S&P

      "What is thy bidding, my master?"
      "There is a great disturbance in the Ratings".
      "I have felt it".
      "We have a new enemy, the rating agency who downgraded DHCOG."

      Here's the press release.  I trust the Death Star is ready.

      The International Banking Corporation - Arrest of CEO

      Rupert Bumfrey had a post today that AlBilad Newspaper in Bahrain reported that the former CEO of The International Banking Corporation had been arrested after being charged with fraudulent transactions in excess of US$ 2 billion.

      That really caught my eye so I decided to take a look at AlBilad's account, figuring it might have additional interesting details.  It does.  As well, it suggests some potential answers to the question as to why the recovery rate on TIBC debt is expected to be so low.

      First, a look at the article and then the usual comments.

      Here's a quick translation of AlBilad's article.

      Nawaz Hamza, Head of Public Prosecution Department, ordered the detention of the (former) Chief Executive of TIBC for a period of six days or the payment of a bond of BD10,000 (US$26,500).  The charge is breach of trust and misappropriation of funds/embezzlement.

      Reportedly, the accused chose prison and after a two day investigation, was charged with fraud  involving in excess of US$2 billion. 

      Earlier the Prosecutor had determined that the signature of Sulyaman Ahmad AlGosaibi on numerous documents connected with loans and money transfers had been forged through computer imaging of Sulayman's signature.  Once scanned, the signature's appearance had been enhanced by using blue color to make it appear to be an original signature.  And presumably the discovery of forgery prompted the investigation of the CEO.

      (An earlier AlBilad article here from 17 January has a bit more detail on the forsensic investigation that determined that Sulayman's signature had been forged on various agreements - presumably loan and similar agreements - as well as certificates of board decisions.  Interestingly, this article asserts that TIBC was under the administration of Mr. Al Sanea.  In fact it makes that statement twice.  It's unclear what the basis for this statement is,  that is, how Al Bilad knows this to be the case.  As you'll recall if you've been following this case,  this is AlGosaibi's complaint: that Mr. AlSanea not they are responsible for the financial distress in their companies).

      The article notes that in a meeting  last year in August with regional, Arab and international creditors AlGosaibi had presented a number of documents which it asserted were forged and which established that there had been a widespread forgery of documents and certificates used to obtain loans, bank guarantees, and to make transfers of funds in the name of TIBC and AlGosaibi entities.  As the article notes, this was an attempt by AlGosaibi to prove its innocence from involvement in these transactions.  As well, it  requested creditors to submit documents for transactions with TIBC and the money exchange firm in Saudi so that it could reply on them - presumably whether they were genuine or forged.

      Now to the analysis.
      1. First a bit of context, TIBC's 31 December 2008 financials (the last issued) showed total assets of roughly US$3.8 billion.  So in excess of US$2 billion is quite a large sum even when considering that some of the transactions also involved AlGosaibi entities in Saudi Arabia, such as the money exchange firm.
      2. The assertion of widespread fraud suggests some possible reasons for the very low anticipated recovery rates on TIBC.  On that topic, the Governor of the Central Bank of the UAE is on record as telling his banks to provision 100%.   Earlier I had analyzed TIBC's financials and was left scratching my head about the decline in asset values that would be required to cause the apparent loss.  I was focused on duff investments and loans resulting from poor business judgment not fraud. Two potential explanations surface from this assertion of fraud. First, that not all liabilities are recorded.  Thus, assets may be roughly close to the US$3.8 billion in TIBC's financials but real liabilities may be US$2 billion  or so more.   Second, if one is going to forge documents to secure funds, then one is probably not going to have  any scruples about forging documents for assets, though this involves a bit more than scanning one person's signature and changing its color. Just to be clear:  the article does not explicitly state that there are unrecorded liabilities or fraudulent assets.  But that seems a logical conclusion.
      3. It's important to note that the former CEO has not been convicted. And all we have is a press report that he has been accused.  It's important to note that under Bahrain's Law #47 of 2002 ("Press Law") disclosure of the identity of those accused and press reports on trials are limited so this is at present an uncomfirmed press report.
      4. It's hard to understand how BD10,000 in bail is adequate security in a case allegedly involving over US$2 billion.  But then again the courts of Bahrain move in the most mysterious of ways.  One can be fined BD1,000 for hitting someone with a fish.  And BD50 for sexual assault.  

      International Investment Group Kuwait Cures Payment Default

      If you've been following the story, you know that on 11 January, IIG Funding Limited was to make a Periodic Distribution Payment (equivalent to interest under a conventional bond) of US$3,353,062.50 on its US$ 200 Million Trust Certificates "Sukuk Al Mudarabah" due 2012.

      It did not.

      At the time IIG (which is the source of the payment) advised it intended to pay on the 19th.

      The payment was received on 20 January.

      Under the terms of the Certificates a  three day delay in payment is grounds for the dissolution of the Trust.  Once the three days passes, even if IIG makes the payment as it did in this case, the Certificateholders have the right to dissolve the murabaha transaction.  A dissolution  is the same thing as an acceleration of a conventional bond:  IIG would be legally obliged to repay the Certificates in full - some US$200 million in principal plus any Periodic Distribution Payment ("interest") due.  

      However, just as with a conventional bond, the Certificateholders must vote to exercise their right to accelerate payment. 

      My guess is that they will not.

      Tuesday, 26 January 2010

      Interesting Blog: The Boursa Exchange

      Today's feature The Boursa Exchange, a blog on life in downtown Cairo. 

      You might wonder why the plug here as it apparently has nothing to do with finance or the GCC.   Well, it has some very interesting posts.  And Cairo is one of the great cities in the world.  And this is my blog.  There is also a link, however tenuous to finance, the blog does take its name from the area where the Cairo Stock Exchange is located

      As befits a country with Egypt's history, Cairo has a veritable treasure trove of buildings and neighborhoods - different periods, different styles ...

      There's a neat book by Samir W Raafat "Cairo the Glory Years", which focuses on the modern European inspired architecture.  Sadly, it seems a lot of these gems are suffering from lack of proper attention. 

      On the other hand, there are some new triumphs - the gisr "gamila" fouq 26th July Street in Zamalek.  And, of course, the Burg Al 'Ayb.  Or is that Burg Al 'Aar?  Shukran gazilan, Ustath Khalid!  

      UAE Banking Statistics December 2009

      The Central Bank of the UAE has published its "Banking Indicators" for December 2009.

      As noted, the figures for 2009 are provisional and subject to revision.  Also the Total Private Funds (shareholders' equity) does not include current year earnings.

      Once 2009 fiscal year audits are completed and approved, then it will be possible to perform an in-depth analysis of the UAE banking sector's performance.

      In the interim, as a general comment, there were no significant changes or obvious signs of significant distress.

      Total assets in the system are down some AED12.5 billion (US$3.4 billion) from November.  That is a fluctuation of less than 1%.  Year over year, total assets are up some AED62.9 billion (US$17.1 billion) an increase of 4.3% over 2008.

      Looking at December 2009 figures, loans are down AED9.4 billion and personal loans up AED0.6 billion compared to November 2009.  When December 2009 figures are compared to December 2008  the increase is AED24 billion and AED3.8 billion respectively. The changes are respectively 1% and 0.3% from November 2009  and roughly 2% from December 2008.

      The closely watched specific provisions number was AED32.6 billion in December roughly the same as November's AED32 billion, significantly above December 2008's AED19.7 billion.   General provisions for December 2009 were AED10.7 billion versus AED9.3 billion in November and AED5.3 billion in December 2008.  Here the percentage changes are more dramatic when December 2009's figures are compared to December 2008's:  65% for specific provisions and 102% for general provisions.

      Another Own Goal for Team Dubai in the S&P/DHCOG Ratings Dispute

      You've probably seen the press articles that Standard and Poor's lowered the rating on DHCOG from BB+ to B.  A weaker cash flow and lack of information are cited as the reasons along with some background on the Emirate and Dubai Inc.  These reports also note that S&P has withdrawn its rating.

      What I want to focus on in this post is the proverbial "war of words" that they have launched.

      Was this war necessary? Who stands to win? Who will be the most damaged?

      As you might guess from the title, I have my own view. Team Dubai has roundly booted yet another one into its own net. And when it comes to scoring, it seems that just about everyone on the Team is capable.  To be clear here I am referring to DHCOG's reaction to the ratings downgrade and withdrawal by S&P.

      Let's start by reviewing each's press release – where better to wage a war of words.

      First, S&P. Their press releases, including rating actions, are password protected (though all you need is an email address and the willingness to give it to them to get access). If you can't or don't want to do that, Bloomberg has a more complete account than many of the reports in the press. 

      S&P states that:
      1. Materially weaker cash flow and a resulting negative impact on liquidity as well as lack of clarity on potential government support (that famous "implicit guarantee" rears its head again) is the basis for the ratings decline. 
      2. Because of "inadequate timeliness of information and insufficient documentation (emphasis mine) to maintain their surveillance" they have decided to cease rating the company.  (You might ask why they didn't just withdraw quietly with no fuss and no downgrade.  It's common practice that a rating agency doesn't simply withdraw without either reaffirming or changing the rating.   This is especially the case if they have negative information and conclusions. Since this will be their last word, to do otherwise might leave the market with the wrong impression of their opinion. As to the fuss, it either came as a reaction to what I expect were rather sharp discussions between the two parties. The other less favorable interpretation is that there are significant shortcomings in the information that S&P cannot let pass without comment.). 
      3. Three further important negatives. First, the rating trend is negative: more erosion in credit quality is expected. Second, the rating and the negative future view reflect their base case. In other words they are not basing their rating and view on the future on the "downside" case. Third, a broad criticism of "lack of market transparency, reliable market data, and the level of financial information" (Ouch).
      Now over to DHCOG's press release.

      Their view is clearly and starkly stated.
      1. They dropped S&P as a rating agency due to S&P's "lack of understanding of DHCOG's business, its operations and relationship with the Government of Dubai." 
      2. They have been "sharing adequate information frequently and in a transparent manner" with S&P. 
      3. S&P has made "inaccurate statements coupled with factual errors that are misleading." 
      4. Therefore, they "discredit and disagree with the content of the latest S&P report". 
      5. They will continue to work closely with other rating agencies and directly with investors in full transparency".
      Now let's look a bit deeper.

      Not so long ago, November 2008 to be precise, DHCOG was rated investment grade with "A" or an "AA-".  A "B" rating is a bitter pill, though DHCOG has had prior tastes from earlier downgrades. At any time, a downgrade isn't welcome.  Given Dubai's current difficulties, the downgrade – dangerously close to CCC territory – was probably seen as a direct threat to the company, the parent, and the Emirate itself. Add on top of that a rather broad and sharp criticism of market transparency and reliability and DHCOG's strong reaction isn't surprising.  Another concern might as well be the potential adverse affect on the main shareholder's attitude to the management of the company. What I suspect is the proverbial straw on the camel's back is that S&P signaled that it was likely to further downgrade the company, probably into CCC territory.

      Who dropped who?

      A tricky question. 

      Usually such disputes are settled in such a way that no excessive dust is raised.  The company tells the rating agency it isn't happy with the rating. The rating agency advises that it cannot change the rating. So they find a way to part – an amicable divorce. That wasn't the case here.  Both parties have kicked up quite a bit of dust and it seems more than a few rocks.

      My guess would be the company made the decision to prevent further downgrades. S&P could have maintained coverage and just marked the company down further if it felt the information were inadequate or delivered too late unless of course it felt the situation was so bad that to continue would violate its integrity and potentially cause severe damage to its reputation. The question that can be posed to S&P is how does this lack of market transparency and reliability affect its ability to rate other companies. Is the situation so severe that it needs to withdraw from other rating engagements?

      Just how serious is the dispute?

      Both have levied fundamentally serious charges against one another that go to the heart of the other's competence. And a hint of criticism of integrity.
      1. S&P contends that the company was not providing information on a timely basis and that when supplied the documentation was inadequate. 
      2. DHCOG claims that S&P is unable to understand its business or its relationship with the Dubai Government – in effect the rating agency doesn't have the skills to perform its job. But more than that, compounding its deficient critical skill, S&P is making factually incorrect and misleading statements – a direct attack on its integrity.
      Whose story is the market more likely to find credible?

      In a dispute like this, outsiders are unable to conclusively determine whose story is true.  They don't have the facts so they rely on the reputation of the parties, their presumed motives, and their conduct in the dispute. Dubai is at a disadvantage on all three except perhaps in the region.

      While the folks back home will probably quite naturally take DHCOG's side, the wider market will tend to believe the rating agency.


      S&P enjoys a better market reputation than DHCOG. It is a "household name" and has built a perception in the market that it is a smart thorough institution.

      The central reason though will be the perception that the company is motivated by defensive self interest. The downgrade affects the company's access to debt markets as well key deal terms, e.g., tenor, pricing, security and covenant packages.  It may also affect the price of the company's stock since shareholders are legally subordinate to all creditors. Faced with these potential outcomes, it's expected that the company will fight to prevent them from happening. Given the negative outlook, it's likely that S&P would have downgraded the company further. While DHCOG would prefer to avoid the "company" of single "B" rated companies, consorting with those in the "CCC" class has to be an even more distasteful prospect.  Also complicating DHCOG's sales story is the fact that many a company in this sort of situation has claimed that credit or stock analysts didn't understand their businesses or the real worth of the company. But, generally, history has vindicated the analysts.

      On the other hand, the market finds it hard to believe the rating agency has a hidden agenda or gets great benefit from the downgrade. It is seen as doing its job in delivering the bad news.

      So what does a smart company do in this situation?

      The first is to realize that not much can be done.  The rating has been lowered.  No amount of protestation will cause the rating agency to change it. Trying to convince the market that you're right and the rating agency is wrong is difficult, if not impossible, for the reasons outlined above. And a variety of parties are locked into using the rate whether or not they believe it is correct.  Entities subject to Basel II. for their capital adequacy calculation.  Investment companies who are limited to investments of a certain credit grade.  Banks who translate external credit grades into internal models for underwriting decisions and pricing purposes, etc.

      The second is to choose one's battles carefully. There is truth and there is the appearance of truth. The market does not have the facts. It will judge on appearance. Even assuming that the rating agency is dead wrong, the company has to think carefully if a bitter public dispute will help or harm it. One does not want to wind up in a worse position after the battle than before.

      The third is to reply appropriately if one chooses to fight. What arguments are most likely to be plausible? As hurt and perhaps outraged as they were, the wiser thing for DHCOG to have said would be that S&P doesn't understand our business and hasn't given sufficient weight to certain factors. We disagree with the assumptions in their economic model. Their interpretation is therefore wrong. This is much better than saying that the rating agency has the facts wrong, that it lacks the requisite skills or that it is making inaccurate misleading statements. It will be very hard to convince the market that this is the case with a firm with S&P's reputation.  

      Compounding DHCOG's position is that other rating agencies have been downgrading it. So in a sense DHCOG is not just fighting one agency, it is fighting the Big Three. An even larger credibility disadvantage. What the company can hope for is that there will be differences among the agencies and it can therefore discredit the lower rating. But, last December Moody's downgraded the company to "B1" – the same as S&P. Fitch's rating is "BB" – higher but by only one level. All three agencies have assigned negative future trends. This certainly takes the wind out of DHCOG's argument. Where there may be hope is that other agencies will not be so negative about the company's timeliness and quality of information and may not wield as broad a brush in criticizing the local market.  Perhaps, apparently small victories but important victories particularly in this climate.

      Perhaps, in drafting its press release, DHCOG's target audience was the regional market, that in the UAE or one rather important shaykh in Dubai. And for this audience, their approach may have been the right one. But in terms of the wider market, the one that actually matters for financing, it is not. The press release is unprofessional. It sounds too emotional. It looks like it was drafted in a fit of pique. All that is missing is the sound of the foot stomping.

      In the midst of a very challenging refinancing process Dubai Inc. can't seem to avoid scoring own goals.  This isn't the first.  And this isn't the only player (Dubai Inc entity) to do so.  Team Dubai needs to get a better hand on its play (public relations).  The task is difficult enough as it is without needlessly making it worse.   

      Not only for the good of today but as well for the good of tomorrow.

      Investment Dar - Forward Steps on Legal Agreements for Restructuring

      AlQabas quotes sources on the Creditors Committee that Committee is moving forward with the legal documentation and the implementation of the restructuring despite the fact that the Central Bank has  not yet approved TID's financials.  (Those of you reading the Arabic text will notice that I have added the words "not yet" as the original wording didn't make sense.)

      Two working meetings involving the Creditors Committee and its legal consultants will be held in preparation for a meeting at the end of February at which the wider group of creditors will be asked to give their final agreement to the legal documentation for the restructuring.  It's been agreed  in principle that the first meeting will be held on 8 February to agree the final draft of the legal model (documentation?) for the plan.  At this meeting two of the members of the Committee will be formally delegated to work with the legal consultants on finalizing certain technical details.  As per the article, it's been agreed that Lloyds Bank will be one of them.  A Kuwaiti institution will be chosen as the other. (Presumably,the choice of a Kuwaiti and an international firm is because implementing the plan involves steps in both Kuwaiti and "international" jurisdictions).  The article notes that the Committee's legal advisors intend to consult with these two firms and obtain their advice on numerous non legal technical points related to the transfer of the assets, the mechanisms for doing so, and the location of the entities that hold these assets).

      A second meeting will be held on 18 February to put the final touches on the legal documentation. And then a wider creditors meeting will be held at the end of the month.

      Based on my admittedly a tortured translation (either I'm off my game or AlQabas' reporter is), some comments:
      1. Clearly, the creditors have a sense of urgency to get the deal done.  They are not waiting for CBK approval of the financials. This urgency is probably driven by two things.  First, having labored so long to get approval from a majority of creditors, the Committee wants to bind that approval through the signing of definitive documentation.  The longer this takes the more chance  that some creditors will withdraw their previous approval. Some approvals already may be contingent on agreement before the end of February or some other uncomfortably close other deadline.  Second, the creditors have evidenced a keen desire to get TID's assets under their firm control, e.g., the request that the CBK to appoint a monitor at TID during the negotiations, the repeated comments about disclosure, transparency and corporate governance, the requirement that the Company appoint a Chief Restructuring Officer, etc. 
      2. What is hard to understand is the delay at the CBK.   Given the importance of TID's restructuring, it would seem that the CBK would be working hard  to finalize its review. 
      3. With respect to the meeting schedule outlined above, I wonder if  the plan is to sign the definitive legal  documentation for the restructuring at the end of February.  If that is the case, then it would seem that following the 8 February meeting, the Committee would send creditors draft documentation for comments with the meeting on the 18th designed to address any points raised and allow time for the circulation of a revised draft.  Then signing could take place at the end of that month.  If not, then it would seem signing would occur sometime in March.
      4. What will be very interesting will be how the restructuring deals with the non signing creditors.   And how those non signing creditors will react.  Will there be a late rush to join the restructuring?  Or will these creditors pursue TID for payment in court?  A right it seems they retain in the absence of a legally enforceable "cram down" in Kuwait.   If so, it would seem highly likely that one or more of them would challenge the asset transfers because after the assets are transferred and pledged to the signing creditors, there will be no assets of any significant value left in TID with which to settle their debts. 
      5. So successful meetings in February may not be the last act in this long running saga. 
      6. In any case, besides potential lawsuits, at a minimum, TID will probably have to fulfill the same KSE requirements as Global Investment House: obtain shareholder approval of the transfer and pledge of assets and then request KSE approval before making the transfers.  It's hard to see how the KSE could or would want to cut a different deal for TID.

      Monday, 25 January 2010

      A Man's A Man

      St. Michael's Cemetery, Dumfries Scotland.


      Now is as good a time as any to say "argh" I suppose.

      But, on to Wednesday.  Red and White!

      Saudi Mortgage Law on the Way?

      So says the Gulf News quoting Bloomberg quoting HE Muhammad Al Jasser, Governor of SAMA.

      It might come as a surprise to many out there but there is substantial unmet demand for housing in the Kingdom.

      This law will facilitate the mobilization of real estate finance, particularly for residential housing.  It will also provide alternative investment opportunities for local financial institutions.  

      In 2006 Unicorn Investment Bank in Bahrain teamed up Standard Bank and the IFC to launch the first ever securitization of housing receivables in the Kingdom.  Here's the IFC's write-up on the transaction. It was a modest sized deal of some US$18.5 million.  But followed by further deals by UIB in 2007 (US$600 million and US$1,000) for Dar Al Arkan.  Here is the portal page to UIB's press releases on these transactions, if you're interested.