Global Arab Network | Bahrain-Based Gulf Finance House Lowered on Partial Debt Extension

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Bahrain-Based Gulf Finance House Lowered on Partial Debt Extension

Global Arab Network - - George Haddad

Wednesday, 10 February 2010 17:30

Standard & Poor's Ratings Services said today it lowered its long- and short-term counterparty credit ratings on Bahrain-based Gulf Finance House G.S.C. (GFH) to 'SD/SD' (selective default) from 'CC/C'.

"The downgrade to 'SD/SD' follows GFH's completion of the extension of maturity of $100 million of its $300 million syndicated loan facility due Feb. 10, 2010," said Standard & Poor's credit analyst Emmanuel Volland.

GFH has obtained consent for the partial extension from all facility lenders. According to Standard & Poor's Ratings Services, GFH achieved the partial extension by executing the facility's "deed of extension" clause. The new maturity of the extended portion is six months from Feb. 10, 2010.

"Under our criteria, we consider GFH's maturity extension to be a 'distressed exchange' and therefore tantamount to a default, because the new maturity represents a change to the facility's originally scheduled payment terms," said Mr. Volland.

GFH intends to soon restructure a second $100 million facility by agreeing another partial maturity extension with facility members. The ratings would consequently remain at 'SD/SD' pending completion or another resolution of the restructuring.

"We expect to reassess the creditworthiness of GFH by analyzing, among other things, its new liability structure, cash flow projections, and its overall business model and strategy. Based on present information, Standard & Poor's Ratings Services believe that the ratings on GFH could be raised to the 'CCC' category from their current 'SD/SD' level," said Mr. Volland.

With total assets of $2.5 billion on Sept. 30, 2009, GFH is an Islamic wholesale investment institution based in the Kingdom of Bahrain (A/Stable/A-1). GFH's main focus and area of expertise is economic infrastructure projects. Geographic and sector concentrations are high in its view because GFH has focused on real estate, infrastructure, and industrial projects across its home region.

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