Creditors of Abu Dhabi-based Gulf Marine Services (GMS) are close to hiring an adviser to help them renegotiate debt terms, two sources familiar with the matter said, Reuters reported. London-listed GMS, which provides support vessels for offshore oil and gas and other energy installations, has been hurt by a downturn in the oil and gas services industry after a slump in oil prices in recent years reduced demand.
North Africa/Middle East
Lebanese Parliament Speaker Nabih Berri said he had a “positive” feeling over a sovereign credit rating report expected later this week, although he had no information about it, Lebanese newspaper al-Joumhouria reported on Wednesday, Reuters reported. Lebanon, saddled with one of the world’s heaviest public debt burdens and blighted by years of low economic growth, is seeking to put its public finances on a sustainable path by implementing long-delayed economic reforms. However, markets have been pricing in the risk of a sovereign credit rating downgrade in recent days.
Dollar-denominated bonds issued by Lebanon’s government dropped to new lows on Tuesday on worries about the risk of a sovereign credit rating downgrade by S&P Global, Reuters reported. The 2027 issue slumped by 2 cents in the dollar to trade at its lowest level, while the 2026 issue shed 2.4 cents to also reach a new low, according to Tradeweb data. “There’s an upcoming rating review by S&P and people are focusing on the possibility of a downgrade,” said Giyas Gokkent, of JPMorgan Securities.
Lebanon’s sovereign ranking will probably be cut deeper into junk by S&P Global Ratings within days, putting its bonds into a category considered vulnerable to nonpayment as the country struggles to claw back enough foreign currency, according to Goldman Sachs Group Inc, Bloomberg News reported. One of the world’s most indebted nations is on negative outlook at S&P, which is due to publish a review on Friday and currently rates Lebanon B-, six steps below investment grade and one notch higher than Moody’s Investors Service.
Billionaire Mukesh Ambani’s Reliance Industries Ltd. is on a mission to reduce debt after racking up $76 billion in capital expenditure in the last five years, Bloomberg News reported. The conglomerate aims to be a zero-net-debt company in 18 months, Asia’s richest man told shareholders Monday. Aiding that effort would be a decision to sell 20% of Reliance’s oil-to-chemicals business to Saudi Arabian Oil Co., or Aramco, at an enterprise value of $75 billion. The company will also start preparing to list its retail and telecommunications units within five years, Ambani said.
This isn’t the first time Saudi Arabia has deployed the whatever-it-takes weapon to beat back the bears. In May 2017, energy minister Khalid Al-Falih used that exact phrase when Brent crude had slipped below $50 a barrel, a Bloomberg View reported. It sparked a brief rally, followed by a brief dip again, that ultimately segued into a sustained march toward $86 by the fall of 2018. It’s different this time. As bleak as things seemed to OPEC in May 2017, the organization actually had some favorable trends going its way.
The startling collapse of Abraaj Group, the once-mighty Middle Eastern private equity firm, continues to reverberate, Bloomberg News reported. Regulators in Dubai, where the dealmaker is based, have imposed a record fine, and Abraaj founder Arif Naqvi and a clutch of senior executives face legal charges in the U.S. The scandal, meanwhile, has all but frozen fundraising by other Dubai-based buyout companies. The Dubai Financial Services Authority fined two Abraaj Group companies a combined $315 million for deceiving investors and misappropriating funds.
The cost of insuring exposure to Lebanon’s sovereign debt rose to a record high on Friday after the president warned of the risk of harsh financial measures from international institutions unless sacrifices were made to save the country from economic crisis, Reuters reported. Lebanon’s five-year credit default swaps (CDS) rose to 990 basis points (bps), up 33 bps from Thursday’s close, data from IHS Markit showed.
The number of distressed companies in Europe, the Middle East and Africa rose in the first half for the first time in more than two years, according to a report by Moody’s Investors Service, Bloomberg News reported. Moody’s list of distressed companies rose to 47 from 39 in the first half of the year, according to the report published on Thursday. It’s the first time the list increased since the end of 2016.