Demand for new rating requests from Middle Eastern corporates is likely to increase as companies seek to diversify their funding sources by issuing conventional bonds, Sukuk and structured-finance instruments and to extend their debt maturity profiles, Moody's Investors Service said in a new report that assesses refinancing requirements of unrated non-financial corporate issuers in Gulf Co-operation Council (GCC) countries. The report entitled “Refinancing Corporate Debt in the Arabian Gulf” is supported by the expectation that banks will continue to judiciously manage their corporate credit exposures, thereby prompting corporates to seek funding in the capital markets. Moody's concludes that the greatest need to extend short-term debt maturities is among companies in the telecommunications industry, real estate sector and related industries such as construction, as well as investment holding companies. A few months ago, Moody's highlighted the challenges posed by the 2012 wall of maturing debt for rated issuers in GCC countries. Moody's now estimates that unrated corporates from the six GCC countries have over $ 67 billion of total debt outstanding (the total for rated corporates is $145 billion), of which over 28 percent is short-term debt. In addition, the proportion of bank debt for unrated corporates is high, which Moody's believes makes such corporates more likely to pursue debt funding as an alternative. - SG/QJM Companies without ratings in Gulf Arab states owe more than $67 billion and are likely to sell bonds, Islamic notes and structured-finance instruments to extend their debt maturities, Moody's said.
