Standard & Poor’s Ratings Services said today that issuers in the Gulf Cooperation Council (GCC) countries face rising refinancing risks over the next three years because the amount of debt maturing in the region will increase significantly between 2012-2014.

Industry experts estimate bonds and sukuk of about $25 billion will mature in 2012, rising to about $35 billion in 2014. Standard & Poor’s believes the region is therefore entering a challenging loan and bond refinancing cycle, especially given the ongoing volatility in capital markets and fears that slowing global economic growth is already curbing corporate debt issuance and heightening refinancing risk in the region.
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Saudi Arabia is not immune to the debt crisis in the European Union.

“A default that involved Spain and Italy would almost certainly lead to a seizing up of eurozone — and quite possibly global — interbank markets,” says Saudi-based Samba bank.

“Even if the financial shock was confined to the zone itself, European demand for raw materials and manufactured products (mainly from emerging markets) and services (mainly from North America) would shrink dramatically and this would be enough to imperil the global economic recovery.”
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S&P’s damning verdict of the United States economy:

• We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.
• We have also removed both the short- and long-term ratings from CreditWatch negative.
• The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
• More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic
• challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
• Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.
• · The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

Ratings agencies have an uncanny knack of turning up at morgues and pronouncing the death of the deceased, so it should have been no surprise that Standard & Poor’s did the ‘unthinkable’ and downgraded the United States’ long-term outlook to negative from stable. Read More Here

Ratings agencies have an uncanny knack of turning up at morgues and pronouncing the death of the deceased, so it should have been no surprise that Standard & Poor’s did the ‘unthinkable’ and downgraded the United States’ long-term outlook to negative from stable. Read More Here