Breakfast Wrap: I’m Mad As Hell, Egypt Oil Loans, Turkey $1 BN

I’m Mad As Hell

Yesterday’s blog post on an incident involving the editor got some strong responses, and Rebel Economy thanks you for your interest, but most of all, for getting mad (angry, to you Englishmen).

In the words of Howard Beale in the 1970s American satirical film “The Network”:

I’m mad as hell, and I’m not going to take this anymore!”

A two-minute clip from the film:

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Egypt’s ministry of finance has signed a $235 million financing agreement with the petroleum ministry, apparently to meet the country’s “commodity needs”, local state-run newspaper Al Ahram reported this morning (Ar).

The “concessional financing” is in the form of a Murabaha Islamic financing, or a non-interest bearing loan, and is part of a recent agreement made with the International Islamic Trade Finance Corporation, part of the Islamic Development Bank, for $1 billion in financing.

It is aimed at the country’s state-owned oil company, Egyptian General Petroleum Corporation.

EGPC’s debt has risen from half a billion Egyptian pounds in 2001, to 200 billion Egyptian pounds today (about $30 billion).  A little birdie tells me all these loans are not actually for meeting commodity needs but for paying back billions of dollars of debt not just to oil companies but to international and domestic banks that have financed EGPC.  

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It was a good day for Egypt’s President Mohammed Morsi.

Egypt signed a deal on Sunday to loan $1 billion from Turkey, half of the aid package Ankara promised Cairo earlier this month.

Turkey’s Prime Minister Tayyip Erdogan trumpeted Turkey’s credentials as a rising democratic power on Sunday, saying his Islamist-rooted ruling party had become an example to the Muslim world after a decade in charge.

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A deadline for banks in the United Arab Emirates to cut their exposure to the government passed on Sunday with no clear indication of whether authorities would enforce the new rules or give banks more time to comply, bankers said.

Under the rules, announced in early April with a September 30 deadline, any bank’s lending to the governments of the seven-member UAE federation and related entities is capped at 100 percent of its capital base. Lending to a single borrower is limited to 25 percent. There was previously no limit.

The rules aim to prevent any repeat of Dubai’s corporate debt crisis, which erupted in 2009 as the real estate market crashed.

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A potential merger agreement between Abu Dhabi’s top two developers Aldar Properties and Sorouh Real Estate is expected to be announced “within a month”, a senior Sorouh executive has said.

Indebted Aldar and Sorouh said in March they were in talks for a state-backed merger, which would create a company with $15 billion in assets.

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The latest from one of the biggest commodity mergers of the decade: Miner Xstrata gave its long-awaited blessing to trader Glencore’s revised $33 billion offer on Monday, though only on condition shareholders also support a controversial pay package aimed at retaining key managers for at least two years.

Xstrata confirmed it had bowed to rebel shareholders’ demands on pay, as widely expected, and effectively split a vote on the package to retain key managers from the main vote on the merger.



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