Sovereign borrowing in MENA to soar to $136bn in 2019: S&P

The King Abdullah Financial District in Riyadh. Saudi Arabia is expected to have the highest level of commercial long-term borrowing of 13 regional countries assessed by S&P. (Shutterstock)
Updated 24 February 2019

Sovereign borrowing in MENA to soar to $136bn in 2019: S&P

  • Countries covered by the report include Saudi Arabia, Egypt, Lebanon, Kuwait and Morocco

LONDON: Sovereign borrowing by 13 states in the Middle East and North Africa is set to rise by 20 percent this year, as states look to refinance long-term debt and cover fiscal deficits, a report by S&P Global Ratings found.

The countries’ long-term borrowing is estimated to hit about $136 billion in 2019 compared with $109 billion in 2018, when issuances fell by 38 percent, the ratings agency said.

Countries covered by the report include Saudi Arabia, Egypt, Lebanon, Kuwait and Morocco.

“Higher oil prices and fiscal consolidation measures in Gulf Cooperation Council (GCC) countries significantly reduced GCC sovereigns’ funding needs in 2018. However, lower oil prices in 2019 will not support a further reduction in GCC fiscal deficits,” it said in the report.

“We expect Kuwait, Egypt, and Iraq to significantly increase their gross commercial long-term borrowing in 2019 compared with 2018.

“Most GCC countries have been tapping international debt markets in recent years to meet their funding needs, diversify funding sources, and reduce liquidity pressures in the domestic banking systems.”

About 44 percent of the borrowing this year will go toward refinancing maturing long-term debt, resulting in an estimated net borrowing requirement of $76 billion, the report found.

That will see total outstanding debt hitting $892 billion this year, 11 percent more than in 2018.

Saudi Arabia is expected to have the highest level of commercial long-term borrowing of the 13 countries, with forecast borrowing of $29.3 billion this year, slightly lower than the $29.6 billion last year.

Kuwait is expected to see the biggest rise in commercial long-term borrowing of all the 13 countries in the study, S&P said.

“This is based on our expectation that the Kuwaiti government will pass a new debt law, raising the debt ceiling and authorizing extra borrowing. We anticipate this will result in Kuwait taking on $15 billion of long-term commercial borrowing in 2019, compared with no borrowing in the previous year,” it said.

Egypt is also forecast to see a significant rise in borrowing this year, S&P said. It expects borrowing to rise to $27.6 billion this year, up from $17.7 billion last year.


Arabtec Holding said to hire AlixPartners for debt advisory

Updated 25 September 2020

Arabtec Holding said to hire AlixPartners for debt advisory

DUBAI: Dubai-listed contractor Arabtec Holding has hired advisory firm AlixPartners to help it restructure the company’s debt, two sources familiar with the matter said.

AlixPartners is assessing the company’s debt profile, before any potential discussions with Arabtec’s creditors, according to the sources, who declined to be named as the matter is not public.

Arabtec did not respond to a query for comment when contacted on Thursday. AlixPartners declined  to comment.

Arabtec Holding is due to hold a shareholder meeting on Thursday afternoon to decide whether to continue operating or liquidate and dissolve the firm after the pandemic hit projects and led to additional costs.

FASTFACT

 

Arabtec last month posted a first-half loss of 794 million dirhams ($216.18 million).

The company, which last month posted a first-half loss of 794 million dirhams ($216.18 million) and total accumulated losses of 1.46 billion dirhams, said on Sept. 9 that it was calling a general assembly under an article of UAE company law.

The law requires companies to vote on whether they should continue operating if their accumulated losses reach half of their issued share capital.

Shares of Arabtec Holding, which helped to build the Louvre Abu Dhabi and the world’s tallest skyscraper, the Burj Khalifa in Dubai, have plunged 56.7 percent this year. They were down almost 5 percent when a suspension of trading was triggered at 1 p.m. local time ahead of the meeting, which was being held in Abu Dhabi.

Several UAE companies have sought to extend debt maturities or agree better terms in recent years to avoid defaults, after an oil price crash hit energy services and construction.

This week, creditors started to enforce claims against Abu Dhabi-based Al Jaber Group, which has struggled since building up debt in the wake of a UAE real estate crisis and began talks with creditors in 2011.

Dubai-listed construction firm Drake & Scull is working under the UAE bankruptcy law to reach an agreement with its creditors in an out-of-court process.