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“
While corporate issuers in the region largely remained in a financially strong position in 2008, “overall credit quality in the region has declined, and is likely to continue to do so moving forward.”
Moody’s estimated that companies in the region require some $35
billion to $40 billion in debt refinanc-
ing this year.
The Gulf region has seen an unprecedented economic growth in recent years but the worldwide recession took a turn for the worse in the fourth quarter, hitting even the most resilient economies in the region as oil prices which fuelled local real estate markets, also collapsed on weak demand.
“Fundamental credit quality is likely to be tested in the downturn,” said Moody’s, adding that the Gulf has never before been financially tested on such a large scale.
“Rated gulf corporations are not immune from the global financial and economic crisis, particularly where they rely on external demand for their goods and services, or on fresh liquidity to support their operations”, said Moody’s.
The ratings agency said
The total rated and unrated
corporate financing requirements among members of the Gulf Cooperation Council in 2009 is about $35 to $40 billion.
“Addressing these maturities will be a significant challenge, although we expect liquidity to return to the markets as 2009 progresses, and bond spreads to recede from some of the panic-stricken levels seen in the second half of 2008,” said Moody’s.
It said that as markets re-open, issuers with sound credit fundamentals and government-backing should be able to close financing transactions, but these come at a price.“The end of cheap money money has also reached the
The tougher credit landscape will force companies to reassess their business plans as they respond to the new environment, Moody’s said.
Moody’s also expressed concern about the recent move of
It said the move has been
interpreted “as a sign that
“Moody’s will continue to monitor developments closely. If a trend of selective treatment within the federation becomes discernible, Moody’s stands ready to reduce its high support assumptions for government-owned companies in other emirates outside
· rocel@khaleejtimes.com
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