Standard & Poor's questions some companies' reliance on short-term bank debt
Delays by companies in the Gulf Cooperation Council to tap capital markets may exaggerate refinancing risks, Standard & Poor’s Ratings Services said on Monday.
“Higher rated issuers will have no problem rolling over debt, but those farther down the rating scale may find it more difficult to do so,” S&P said in a report.
“Overreliance on short-term bank debt also exposes issuers to refinancing risks down the line.”
Global economic conditions for issuing bonds showed signs of recovery this month after a turbulent August, S&P said. Increased risk aversion by investors and concern about the negative implications of slowing global economic growth were behind the swings, according to the report.
Companies in the six-member GCC are recovering after the worst global recession since the 1930s curbed lending and bond issuances and forced a decline in the regional property market.
The UAE will dominate sovereign-bond offerings among GCC members this year as government sales in the region total $5bn, Standard Chartered said in March.
Government-related entities in the region and companies that bear “significant refinancing risks in 2012” have seen mostly negative outlooks, S&P said.
There is a “return to stability” in the GCC property markets, it added.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.