S&P Global Ratings has downgraded Qatar’s biggest property developer, Ezdan Holding, as it faces near-term refinancing risk related to its $500 million senior unsecured sukuk maturing on May 18, 2021.

“We are lowering our long-term issuer credit rating on Ezdan to 'CCC' from 'B-' and our issue ratings on its sukuk to 'CCC-' from 'CCC+' and removing them from CreditWatch, where we placed them with negative implications May 5, 2020,” the agency said in a report Thursday.

The downgrade reflects S&P’s view that near-term refinancing risk is high because Ezdan is still in negotiations to secure a new credit line. Its $500 million senior unsecured sukuk matures May 18, 2021. In addition, Ezdan has about 900 million Qatari rial of debt maturing in 2021.

“While we understand that discussions are ongoing and the shareholder remains committed to support the company, Ezdan does not have access to any committed credit facilities at this stage. With less than three months remaining to maturity, we believe the company's refinancing options are narrowing and the risk of restructuring, distressed exchange, or default is increasing,” the global ratings agency said.

“Without a committed refinancing plan or an equity contribution from its shareholder, we do not believe that Ezdan has sufficient cash or liquid assets on its balance sheet to repay its debt,” it said.

The agency said Ezdan's liquidity was assessed as weak because of significant shortages foreseen over the next 12 months. This reflects sizable debt maturities of about 2.8 billion rials in 2021, of which 1.8 billion rials is the May 2021 sukuk repayment. The company also faces significant debt maturities over the next 24 months, including the $1 billion of sukuk (May 2021 and April 2022).

However, S&P said it could raise the rating if Ezdan refinances its sukuks maturing in 2021 and 2022. “An upgrade would depend on our expectation of stable operating performance--for instance, EBITDA interest coverage nearing 1.0x with positive FOCF.”

(Writing by Brinda Darasha; editing by Seban Scaria)


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