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mashreq Fixed Income Trading Daily Market Update Sunday, June 21, 2015 Market Update • Emaar Misr IPO offer price set at 3.8 Egyptian Pounds Following the completion of the Institutional Offering Emaar Misr for Development S.A.E. has announced that the offer price has been set at EGP 3.8 per Share, after the Institutional Offering tranche was over 11 times oversubscribed at the offer price. At this price Emaar Misr’s market capitalisation at listing will be approximately EGP 17.6 billion (USD2.3 billion). Emaar Properties PJSC, the parent company of Emaar Misr, will retain its current holdings in Emaar Misr, which will represent 87.01% of Emaar Misr’s post-offer share capital. • Non-oil industries accounted for 69% of economic output last year, state-run news agency reports, citing Prime Minister Mohammed Bin Rashid Al Maktoum. Sheikh Mohammed said the government would spend on large infrastructure projects this year to maintain growth after last year’s robust rate of expansion, when inflation-adjusted GDP grew 4.6%. Projects include 100billion dirham airport expansions, 40billion dirham rail lines, roads and transport projects, tourist facilities, electronic infrastructure, real estate, financial service. The sharp decline in the price of oil since last summer has triggered a renewed focus on diversification. The contribution of the non-oil sector to the economy has already reached almost 70% with a target of up to 80% by 2021. The call for greater economic integration comes ahead of the release of new economic statistics expected this week. The government plans to triple spending on research and development over the next six years and boost the national workforce by 185,000. The stability of the Arab world depends on an economic revival led by the Gulf states, Sheikh Mohammed bin Rashid said. “There is a regional need for a real economic and developmental movement, and serious steps must be taken to achieve economic integration in the Gulf to ensure the stability of the whole region,” Sheikh Mohammed said. He said the Arab world must launch significant economic projects and use its human and natural resources more effectively. “We must address the imbalances of the region in a comprehensive manner, covering economics, politics and security. We must understand that real and sustainable development is the only guarantee for future stability in the Arab world.” (Bloomberg and the National) • UAE and the US sign agreement to provide tax information The UAE and US have signed an agreement to implement America’s new Foreign Account Tax Compliance Act (FATCA), the Ministry of Finance announced in a statement carried by state news agency WAM on Saturday. The agreement means all US citizens in the Gulf state will now have the details of all of their finances held in the UAE provided to the American government, potentially making them liable for additional tax. FATCA was enacted by the US Congress in 2010 to target non-compliance by US taxpayers using foreign accounts. The US law requires foreign financial institutions to provide annual reports on account information of customers who are US citizens and provides penalties for institutions that do not comply."The [UAE] was keen to sign this agreement to protect UAE financial institutions,” Ministry of Finance Undersecretary Younis Haji Al Khoori said. “In the case of non-compliance with the requirements of FATCA, any non-US financial organisation could face a 30% penalty on certain financial returns of its operations in the US market. “The ministry will continue to meet all necessary requirements for linking UAE government financial institution systems to the FATCA e-system. The ministry will also determine the required processes for monitoring reporting by financial institutions." US ambassador to the UAE Barbara Leaf said FATCA was becoming the “global standard in the effort to curtail tax evasion”. “This agreement reflects the UAE's commitment to the adoption of best practices as well as the growing strength and breadth of our bilateral relationship," she said. Under the agreement, the UAE financial institutions must provide the US Treasury Department a report on information about financial accounts held by US citizens or by certain foreign companies with one or more US shareholders that own more than 10% of the company by September 30th , 2015. Certain government institutions, sovereign funds and international organisations are exempt from the reporting requirements. (www.arabianbusiness.com) • Dubai forecasts record air passenger numbers as summer rush begins The operator of Dubai International Airport has forecast record traffic levels this summer and has pledged to add more staff to ensure a smooth operation for passengers. During the first four months of 2014, Dubai International welcomed 26,116,980 passengers, compared to 24,521,454 passengers during the same period last year, an increase of 6.5%, Dubai Airports said in a statement. “Traffic grew steadily in the first four months of the year and the trend looks set to continue throughout the first half, especially with the summer travel peak just round the corner,” said Paul Griffiths, CEO of Dubai Airports. “We are again expecting record traffic levels at Dubai International this summer and again we will be deploying additional resources from the kerb to the boarding gates to ease the flow of passengers through our facility,” he added. (www.arabianbusiness.com) • Blackstone to buy Mubadala-GE venture real estate debt assets Blackstone Group LP will acquire commercial real estate debt assets from Mubadala GE Capital Ltd. as Abu Dhabi investor Mubadala Development Co. weighs the future of its joint venture with General Electric Co. Blackstone, the biggest real estate private equity firm, will pay cash for the debt, which accounts for 8% of Mubadala GE Capital’s total assets at the end of May, the joint venture said in an e-mailed statement Friday. It gave no valuation for the assets. General Electric set up the USD8 billion venture with Mubadala in 2008 to profit from commercial investments in the Middle East and Africa. Each company planned to contribute USD4 billion in equity over three years to the fund, aiming to reach USD40 billion in assets, they said at the time. Mubadala GE Capital said the price of the assets sold to Blackstone is subject to customary adjustment and the deal could be terminated under certain circumstances. Abu Dhabi-owned Mubadala is seeking buyers for GE’s 50% stake in Mubadala GE Capital, as the U.S. company plans to exit from most General Electric Capital Corp. businesses, Reuters reported earlier this month, citing two people it didn’t identify. Mubadala is “in the process of evaluating a range of options for the future structure of the business,” a company spokesman said June 5th . In a separate deal, GE Capital bought commercial real estate debt equivalent to 3% of the venture’s assets and paid in cash, the statement showed, without giving further financial details. Mubadala may sell the rest of its commercial real estate debt assets if opportunities arise, it said. Blackstone earlier this month hired Jonathan Pollack from Deutsche Bank AG to be chief investment officer of its property- debt unit, which oversees almost USD10 billion of investor capital. (Bloomberg) Page 1 mashreq Fixed Income Trading Daily Market Update Sunday, June 21, 2015 • Brazil’s Economy contracts more than expected in April Brazil’s economy in April shrank for the sixth time in the past seven months, as the central bank continues to raise rates in Latin America’s largest economy. The seasonally adjusted economic index, a proxy for gross domestic product, fell 0.84 % in April from the prior month after dropping a revised 1.51 % in March, the central bank said Friday in a report posted on its website. That was below all but one estimate from 33 economists surveyed by Bloomberg, whose median forecast was for a 0.40 % drop. Brazil is the only nation in the Group of 20 raising rates, as inflation is set to breach the upper range of the target for the first time since 2003. Monetary tightening and fiscal austerity measures are slowing the economy, which is expected to face the worst recession in 25 years. The non-seasonally adjusted economic activity index fell 3.13 % from a year ago, compared with a median estimate of a 2.5 % drop, the central bank report said. The central bank has increased the benchmark interest rate in the last six meetings by a total of 275 points. Policy makers said in the minutes of their June 2-3 meeting that the efforts to fight inflation are still insufficient and the bank will act with “determination and perseverance” to bring inflation to 4.5 % by the end of 2016. Even with the key rate rising, annual inflation has accelerated every month this year. Analysts surveyed by the central bank forecast it will close 2015 at 8.79 %, exceeding the upper limit of the 2.5 % to 6.5 % target range for the first time since 2003. (Bloomberg) • Greece’s Tsipras to assemble cabinet on Eve of bailout talks Greece’s cabinet will huddle with the prime minister on Sunday to map out its strategy for a meeting the next day that will decide the nation’s future in Europe’s currency bloc. On the agenda at the meeting in Prime Minister Alexis Tsipras’ residence is whether to compromise on election promises in order to avoid a default on its debt. Months of back and forth with creditors have left banks living day-to-day on European Central Bank funding. Panicked depositors have withdrawn 30 billion euros (USD34 billion) since December and 4 billion euros the past week alone.

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