North Africa/Middle East

Restructuring consultancy Alvarez & Marsal has yet to receive all the information it has requested to conduct a forensic audit of Lebanon’s central bank, according to three sources familiar with the matter, Reuters reported. The Lebanese government hired the turnaround specialist this year to audit the central bank as the country grapples with a financial meltdown on a scale it has never seen before. Alvarez & Marsal declined to comment.

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Sovereign default risks are on course to rise further in 2021, with Iraq, Sri Lanka, Angola and Gabon at high probability of default, say Goldman Sachs analysts, Reuters reported. Five sovereign debt defaults or distressed debt exchanges - in which investors swap their debt for new bonds, often with longer maturities and a reduced value - have already happened in 2020 in the aftermath of the COVID-19 crisis, the most in around two decades.

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Dubai real estate developer Union Properties has completed a payment of 70 million dirhams ($19.06 million) towards its largest lender as part of a debt restructuring plan, it said on Monday, Reuters reported. The restructuring plan, reached in August with its main lender Emirates NBD to restructure its outstanding debt of 946 million dirhams, aims to "improve the Group's cash-flow and restore its standing with the banking sector," the company said in a statement. Dubai’s real estate market, which has been slowing for most of the past decade, was further hurt by the coronavirus crisis.

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Lebanon's Spiralling Economic Crisis

Financial meltdown on a scale never seen before in Lebanon has raised fears for the stability of a country facing multiple crises. Political chaos, the COVID-19 pandemic and a huge explosion at Beirut’s port, which killed nearly 200 people and caused billions of dollars in damage, have all deepened Lebanon’s troubles, Reuters reported. After months of discord, politicians are set to nominate a prime minister on Thursday to form a new government that must launch a recovery and unlock foreign aid.

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Union Properties PJSC is restructuring debt and trimming costs to weather a slump in Dubai’s real estate market, Bloomberg News reported. “We are focusing on restructuring our balance sheet, and all our efforts will be directed to reduce our accumulated losses in the past,” Vice Chairman Fathi Ben Grira said in an interview with Bloomberg TV. The company restructured 946 million dirhams ($258 million) of debt in August. Chronic oversupply has battered property values and rents over the past six years in Dubai.

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The English High Court appointed Ben Cairns and Richard Fleming of Alvarez & Marsal as joint administrators of NMC Health on 9 April 2020, but NMC Health’s operating subsidiaries in the Middle East, including its 36 UAE-incorporated subsidiaries (the NMC Companies), are not within the jurisdiction of the English courts and are not part of the English administration process, JD Supra reported. On 27 September 2020, however, the Courts of Abu Dhabi Global Market (the ADGM Courts) placed the NMC Companies into administration and appointed Ben Cairns and Richard Fleming as administrators.

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United Arab Emirates energy firm Dana Gas has raised a $90 million loan allowing it to redeem $309 million in bonds due at the end of October and avoid a third debt restructuring, Reuters reported. The company whose main assets are in Egypt and in the Kurdistan Region of Iraq said on Thursday it had obtained a one-year $90 million loan from Mashreq Bank. “In conjunction with the company’s cash reserves, the facility will allow full redemption of the sukuk at the maturity date of 31 October 2020,” it said.

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Arabtec Holding asked banks this week for a three-month standstill on debt repayments for its subsidiary Target, sources said, as the Dubai-listed builder that is facing liquidation seeks to save some of its business, Reuters reported. Target specialises in oil and gas projects and marine work with operations in the United Arab Emirates, Qatar and Saudi Arabia, its website says. Shareholders, including Abu Dhabi state fund Mubadala Investment Co, voted last month to liquidate Arabtec after losses deepened due to the coronavirus crisis.

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The International Monetary Fund is willing to work with Lebanon to solve its financial problems and restructure its debt, but needs a partner in the Lebanese government, IMF Managing Director Kristalina Georgieva said on Wednesday, Reuters reported. Speaking with CNN during the annual meetings of the IMF and World Bank, Georgieva said ongoing fragmentation was holding Lebanon back and preventing progress on an economic plan to lift the country out of financial crisis. “It takes two to tango,” Georgieva said.

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Time and money are running out for Lebanon. Foreign reserves have dropped far below what the state already deemed “dangerous levels” when it defaulted on its huge debt in March, meaning it cannot afford to keep subsidies for long, Reuters reported. Leaders in power for decades have yet to enact a financial rescue plan, a year after huge protests against them swept the country, and they have failed to secure aid from foreign donors.

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