By Soren Billing
Action taken after failure to meet Dec. 15 obligation due to cash flow problems.
Fitch Ratings has downgraded Global Investment House’s Issuer Default Ratings (IDR) after the Kuwaiti investment bank failed to meet an obligation on Dec. 15 due to cash flow problems.
The bank’s long-term IDR has been cut to C from BBB, its short-term IDR to C from F3, and its individual rating to E from C. All three ratings have been put on Rating Watch Negative (RWN).
IDRs reflect the ability of an entity to meet financial commitments on a timely basis.
Individual ratings are assigned only to banks and attempt to assess how a bank would be viewed if it were entirely independent and could not rely on external support.
An E rating denotes a bank with very serious problems, which either requires or is likely to require external support.
Global’s Support rating was affirmed at 5 and the Support Rating Floor was affirmed at No Floor.
Support ratings offer Fitch’s judgement of a potential supporter’s – either a sovereign state’s or an institutional owner's – propensity to support a bank and of its ability to support it.
A 5 denotes bank for which external support, although possible, cannot be relied upon.
The Support Rating Floor is Fitch’s judgment on whether the bank would receive support should this become necessary.
A no floor rating indicates that in Fitch’s opinion, there is no reasonable likelihood of potential support being forthcoming.
Global is in negotiations with local financial institutions to refinance the above facility, Fitch said.
The company is believed to have further obligations that will fall due in December.