Bloomberg News

Persian Gulf Restructuring to Rise in 2012, Morgan Stanley Says

January 16, 2012

Jan. 15 (Bloomberg) -- Restructuring in the six-nation Gulf Cooperation Council is likely to increase this year as underlying problems at companies in the region resurface, Morgan Stanley said.

“In many cases, a lot of underlying issues haven’t been resolved,” Peter Fort, the bank’s regional executive director for mergers and acquisitions, told reporters in Dubai today. “Some of the restructuring that were done in 2009/2010 are requiring re-negotiation, so you’ll probably see a wave of re- restructuring as well.”

Companies in the GCC, which includes the U.A.E. and Saudi Arabia, have almost $90 billion of foreign-currency debt maturing through the end of 2013, according to a Dec. 19 estimate by Barclays Capital analysts. Companies in Abu Dhabi, Dubai, Kuwait and Oman have already undergone restructuring after the global financial crisis hurt the region’s property and financial services sectors.

Some restructuring will take place in family-owned companies in the region on a “smaller and relatively quiet scale,” Fort said. There will also be a restructuring of some European assets owned by Middle Eastern investors, he said.

Dubai and its state-owned companies, excluding finance companies, have outstanding debt of $101.5 billion and may need further financial support to meet these obligations, Moody’s Investors Service said in a report Dec. 6.

Companies such as Dubai Holding Commercial Operations Group LLC, Jebel Ali Free Zone and DIFC Investments, which have a combined $3.8 billion of debt maturing this year, are all facing refinancing risks and may experience “ratings volatility” as they move closer to the maturity dates, Moody’s said.

State-controlled companies including Dubai Holding LLC and Drydocks World LLC are still in talks with lenders to restructure debt, while Dubai World reached an agreement with creditors on about $25 billion of liabilities in March after roiling global markets in 2009 by seeking to delay payments.

--Editor: Riad Hamade

To contact the reporter on this story: Stefania Bianchi in Dubai sbianchi10@bloomberg.net.

To contact the editor responsible for this story: Edward Evans at evans3@bloomberg.net


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