GCC faces pressure over $94bn of outstanding debt, says HSBC

Updated 29 February 2016
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GCC faces pressure over $94bn of outstanding debt, says HSBC

JEDDAH: The GCC is facing a $94 billion debt shortfall that it could struggle to meet amid low oil prices and regional economic insecurity, Arabian Business reported, citing HSBC.
In what the bank says is the first time it has compiled all GCC medium-term debt estimates, HSBC research claims sovereign, financial and corporate borrowers in the region must repay or refinance $94 billion in bonds and syndicated loans over 2016 and 2017 as GCC debt matures in the years to 2020.
However, slowing growth, rising rates and rating downgrades in the low oil price era “only adds to the scale of the region’s funding challenge” and could make it harder to repay the debts, the report warns.
It says the UAE makes up the biggest chunk of repayment or refinancing obligations over the 2016-2017 period, followed by sovereign debt in Bahrain and Qatar.
By sector, most of the debt is owed by financial institutions at 22 percent, followed by sovereign wealth funds and energy borrowers with 19 percent each.
According to Arabian Business, the report’s author Simon Williams, HSBC’s chief economist for the Middle East, said: “As we have noted at length in previous reports, the slump in oil prices looks set to leave the GCC oil producers with aggregate fiscal and current account shortfalls of $260 billion and $135 billion over 2016-17 respectively, the equivalent of 8.7 percent and 4.5 percent of GDP.
“The refinancing sum includes outstanding financial and corporate paper as well as debt issued by the sovereign, which is largely focused in UAE, Bahrain and Qatar.
“We remain confident that these funding gaps will be covered. However, expectations that they will be part-financed through the sale of sovereign US dollar debt will complicate efforts to refinance existing paper that matures over 2016-17.”
He noted that close to half of the maturities over 2016-17 center on the banking sector, suggesting any increase in costs at refinancing could contribute to a broader monetary tightening in the region.
Said Williams: “With the Gulf acting as a single credit market… the refinancing challenge will likely be much more broadly felt, with its impact compounded by tightening regional liquidity, rising rates and recent downgrades by international rating agencies.”


Former Nissan chairman Ghosn appears in Tokyo court

Updated 23 May 2019
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Former Nissan chairman Ghosn appears in Tokyo court

  • It is the first of a series of hearings to iron out logistics for Carlos Ghosn’s actual trial
  • Nissan’s former chairman has hired a strong legal team as he fights to clear his name

TOKYO: Nissan’s former chairman, Carlos Ghosn, appeared in a Japanese courtroom Thursday for a hearing ahead of his trial on accusations of financial misconduct.
It was the first of a series of hearings to iron out logistics for Ghosn’s actual trial. The trial date has not been set, and experts say it could be months away.
Ghosn, who led the Japanese automaker for two decades, was arrested in November and charged with underreporting his income and breach of trust. He was released on bail in March, rearrested in April on fresh accusations and then released again on bail on April 25.
Ghosn insists he is innocent and says he was targeted in a “conspiracy” by others at Nissan Motor Co.
Nissan, which is allied with Renault of France, has seen profits nose-dive amid the fallout from Ghosn’s arrest.
Ghosn has hired a strong legal team as he fights to clear his name. One of his top lawyers, Junichiro Hironaka, was seen walking into the courtroom Thursday with Ghosn.
One of the conditions of Ghosn’s release on bail is that he is forbidden to contact his wife. Prosecutors say that’s to prevent evidence tampering.
Ghosn’s lawyers challenged that restriction, saying it is a violation of human rights, but the Supreme Court rejected their appeal Tuesday.
The lawyers can appeal again to have the restriction removed.
In a briefing Thursday, Deputy Chief Prosecutor Shin Kukimoto welcomed the Supreme Court’s decision.
“For married people to be together is important, but I feel there was enough reason for the Supreme Court to support us in this restriction,” he said.
Kukimoto declined comment on the hearing, which was closed to reporters and the public.
Kukimoto also said the maximum penalty upon conviction of all 15 counts of the charges Ghosn is facing is 15 years in prison and a fine of ¥150 million ($1.4 million).