Monday, Feb 15, 2010
DUBAI (Zawya Dow Jones)--Ratings agency Standard & Poor's Monday unveiled a new credit ratings scale for the six member Gulf Corporation Council, or GCC, to serve the growing appetite for raising debt in the Gulf.
"From 2006 to 2008 you had a significant increase in local currency debt issuance in bonds and bank loans which reached its highest level of $27 billion in 2008," Jan Willem Plantagie, regional manager for Standard & Poor's in the Middle East told reporters.
"We felt that we needed to develop a rating product that would serve the high demand (for debt issuance) that is regionally focused," he added.
Local currency debt issuance in the Gulf grew to $27 billion in 2008, from $3 billion in 2006, Standard & Poor's said.
The ratings firm said it hoped the new scale--intended either for businesses domiciled in the GCC region or companies that issued debt in the local currency--would help create a clearer credit risk profile in the Gulf.
"There's a lot of infrastructure and finance funding needed in the region," Plantagie said. "By providing a regional scale we can create an additional instrument for people to issue debt and for investors to benchmark the relative credit risk among GCC issuers."
Standard & Poor's said it doesn't expect a flood of new companies to sign up to the ratings scale immediately but hopes it will increase transparency in the region reeling from the recent high profile corporate scandals and restructuring such as Saudi groups Saad and Algosaibi and Dubai World.
-By Alex Delmar-Morgan, Dow Jones Newswires; +9714 446 1689; alex.delmar-morgan@dowjones.com
Copyright (c) 2010 Dow Jones & Co.
(END) Dow Jones Newswires
15-02-10 1023GMT
