Saudi Arabia

UAE banks are likely to keep a tight lid on lending in coming years, even if the sector manages to avoid an immediate hit from the Dubai World debt restructuring, analysts say. The state-owned conglomerate, which is grappling with $26 billion in debt, is in the final stages of preparing a debt restructuring plan to put to its 97 creditors. Analysts have voiced concerns that domestic lending would dry up if banks are forced to take big losses on Dubai World-related debt.

A Saad Group subsidiary says it is unable to make payments on a US$650 million (Dh2.38 billion) Islamic bond maturing in 2012, The National reported. Saad Trading, Contracting and Financial Services, part of the struggling family-owned conglomerate based in Saudi Arabia, said yesterday it was “impossible for the issuer to perform its payment obligations under the sukuk”. It made the disclosure in a statement to the Bahrain Stock Exchange, where the Golden Belt 1 sukuk is listed.

The International Monetary Fund has “record levels of liquidity” to combat the global economic crisis and debate over new ways of supplementing its coffers was not “today’s problem”, according to John Lipsky, IMF first deputy director. With the Fund facing unprecedented calls on its resources, some policymakers have raised concerns about its continued capacity to react to demands such as its $16.5 billion loan to Ukraine and $2 billion loan to Iceland, the Financial Times reported yesterday.