Wall of debt: Maturities mount in Middle East amid COVID-19 borrowing spree | ZAWYA MENA Edition
A turbulent economic outlook has resulted in a surge of corporate borrowings that will be maturing in a few years across the Middle East, as well as in Europe and Africa.
In a new report that covered hundreds of companies in the EMEA region, Moody’s said total debt jumped by nearly half to $1.6 trillion since 2019, partly due to new borrowings driven by the coronavirus pandemic. The rating movements between investment and speculative-grade firms accounted for nearly $200 billion of the increase.
Governments around the world have pumped billions of cash into the financial system to support their economies and help struggling businesses that have been hit hard by the health crisis. On Saturday, Dubai announced an extra stimulus package of 500 million UAE dirhams, taking the emirate’s COVID-19 relief efforts to 6.8 billion dirhams.
According to Moody’s, speculative-grade companies have increasingly relied on revolving credit facilities with banks during the pandemic. The trend is exemplified by the higher level of drawings under these facilities, suggesting that bond issuance has become too expensive and deemed unattractive by many.
No comments:
Post a Comment