Distressed Kuwaiti investment firms might increasingly resort to debt-for-equity swaps and principal reductions to cut their debt load as they continue to struggle with high levels of leverage and depressed real estate and stock valuations.
Hit hard by the financial crisis of 2008, most of Kuwait's investment firms have traditionally resorted to maturity extensions to avoid default. "Maturity extension has been the modus operandi across the GCC and Kuwait is no different," said Ahmad Alanani, senior executive officer with Exotix in Dubai.
Eager to avoid expensive writedowns on their books, creditor banks have generally accommodated the investment houses' requests to delay principal and interest payments, hoping in a quick turnaround for the sector.
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