Company Press Release:
Emerging Middle East markets to benefit from rising finds supply
The dollar value of project financing deals is on the rise with sub-investment grade bonds and loan securitization fuelling funds supply and opening up increased opportunities for developing markets, such as Iran and Egypt, according to US financial expert Professor H. Nejat Seyhun.
According to Prof. Seyhun, Chairman of the University of Michigan Business School’s (UMBS) Finance Department, the global dollar value of project financing deals has increased 16% over the past three years.
“During 1994-1995, only 24 percent of deals involved over US $1 billion financing,” Seyhun explained. “During 1997-1998 almost 40 percent of deals involved US $1 billion or more.”
Speaking in advance of his first official visit to the Gulf next month (January), Prof. Seyhun said in the Middle East, the project financing of large energy projects is of most interest and will benefit from the evolution of this financing vehicle.
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“Project finance is currently branching out and including new applications in addition to traditional projects. These include power projects, oil exploration and development and satellite communications projects.
“The issues of sub-investment grade bonds as part of project financing is becoming more common. This is good news for emerging markets as many have trouble raising investment grade debt.
“Securitization of project financed loans is also becoming more common. Securitization is likely to increase the supply of funds as more financial institutions will be eager to enter this market. Instead of carrying project finance loans on their books for the long-term, securitization will allow them to get rid of these risks quickly. Again this is good news for project sponsors in developing market.”
The changing face of project financing is to come under the spotlight in January when Prof. Seyhun conducts a three-day executive education program, ‘Strategic Finance For Senior Decision Makers’ in Dubai. The program, organized by Dubai-based Leading Concepts under an exclusive UMBS agreement, will be held at the Emirates Towers Hotel from January 21-23.
“The program has been specifically structured to meet the needs of non-financial senior executives from a variety of functional areas and businesses in both the public and privates sectors,” said Aman Merchant, Chief Executive, Leading Concepts.
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“Corporate financial dealings are no longer the exclusive realm of bankers, auditors and accountants. In today’s global environment with cross-border mergers and stock market launches, all managers need to be clued into the pit-falls and opportunities ahead.”
‘Strategic Finance For Senior Decision Makers’ is the second UMBS executive program to be staged in Dubai. The Business School’s executive programs have been ranked number two in the world by Business Week and number one by the Financial Times.
The January program will also focus on the roles of corporate taxes, capital structure, financial leasing as well as project finance. It will also address initial public offerings, mergers and acquisitions.
And, despite operating in a largely tax-free environment, Prof. Nejat says regional businessmen need to have an understanding of the role of taxes.
“First, taxes may be levied in the future. Second, to the extent that some have overseas place debt, they need to understand the tax effects on the pricing of their debt. Third, taxes are just one example of frictions in the capital markets that create a positive role for debt,” he said.
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Prof. Seyhun, who is regularly quoted in the USA’s leading financial dailies, including the Wall Street Journal and New York Times, is currently researching the time series behavior of asset prices, insider trading, managerial motivation in corporate takeovers, taxes, trading strategies and bankruptcies.
Leading Concepts, the region’s leading executive education provider and event management company, is planning a third UMBS executive education program in the Gulf for April next year. The program, ‘Global Business Strategies’ will be held at the Jumeirah Beach Hotel.
Press Release: Leading Concepts
