Abu Dhabi Shares Drop to Three-Year Low on Dana Gas Debt Concern, Europe

Abu Dhabi shares retreated to the lowest in almost three years on speculation Dana Gas PJSC (DANA) may struggle to refinance debt and as investors trimmed holdings of riskier assets on concern Europe’s debt crisis may worsen.

Dana Gas, which has a $1 billion Islamic bond maturing in October, tumbled to the lowest on record. Emirates Telecommunications Corp. declined for a third day. The ADX General Index (ADSMI) lost 0.8 percent to 2,324.73, the lowest level since March 2009, at the 2 p.m. close in Abu Dhabi. Dubai’s DFM General Index (DFMGI) fell 1 percent, extending its drop after closing at the lowest since June 2004 yesterday.

The MSCI Emerging Markets Index (MXEF) lost 0.5 percent at 12:38 p.m. in London and before a debt sale by France, which was stripped of its top credit rating by Standard & Poor’s. S&P also cut eight other European nations on concern the region hasn’t done enough to contain its debt crisis.

“Outside of what’s happening with global equity markets, because those developments still carry weight locally, we are left with no catalysts for our markets,” said Haissam Arabi, chief executive officer of Gulfmena Investments Ltd. “Some investors are repositioning in the absence of announcements from companies on recommended distribution, and there are question marks that have raised concern that there are funding gap issues for companies such as Dana Gas.”

Dana’s Slump

Dana Gas tumbled 8.1 percent to 34 fils, bringing the slump this year to 24 percent. The company said earlier this month its board considered updates on financing projects in Egypt and the U.A.E. without providing details. Dana Gas, which generates most of its output from Egypt and the Kurdish region of northern Iraq, said in November it is in talks with banks for advice on refinancing the sukuk.

Dana Gas’s corporate communications department wasn’t immediately able to comment.

Emirates Telecommunications, the biggest phone company in the U.A.E. known as Etisalat, dropped 0.6 percent to 9.03 dirhams.

The Bloomberg GCC 200 Index slipped 0.6 percent and Saudi Arabia’s Tadawul All Share Index lost 1.1 percent. Oman’s MSM30 Index (MSM30) retreated 0.2 percent and Bahrain’s gauge rose 0.7 percent. Kuwait’s measure and Qatar’s QE Index (DSM) were little changed.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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