Mideast firms face $91bn refinancing needs

23/07/2014 12:42 AST

Middle East investment grade companies are facing refinancing needs of about $91 billion from bank and bond debt due to mature over the next four years, according to a recent report.

The Moody’s Investors Service pointed out that this acconts for about eight per cent of total EMEA bank and debt maturities of $1.17 trillion.

The report titled ‘EMEA Investment-Grade Non-Financial Companies: Continuing Disintermediation Should Not Challenge Refinancing Execution over the Next Four Years,’ analyses the refinancing needs of its EMEA based investment grade (IG) issuers by examining their bond and bank loans maturities on an annual basis.

Among EMEA countries, companies in Germany, France and the UK account for the greatest amounts of bank and bond maturities (each at 15 per cent) in the next four years.

Last year, however, euro periphery companies appeared to face the greatest refinancing challenges. Moody’s expected refinancing concerns may shift to Russia, which now accounts for 10 per cent of total EMEA (11 per cent of European) bank and bond maturities in the same timeframe.

About 72 per cent of total Russian debt is concentrated in the energy sector with Rosneft and Gazprom making up most of the Russian maturity wall in 2015.

The remaining 28 per cent is shared among the utility, metals and Mining, transportation services, telecoms and chemicals industries.

The average investment grade corporate credit quality over the next four years will be stable to slightly improving, with liquidity remaining solid supported by the gradual macro-economic recovery, said the report.

Despite the trillion debt figure, the investment grade refinancing volumes in EMEA are manageable within the normal capacity of capital markets, it said.

Moody’s also highlighted the increasing flight to debt capital markets versus bank lending, which leaves fewer alternatives if capital markets experience turmoil in the future.

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