Moody's Investor's Service Archives

Industry stalwarts set to headline region’s first financial restructuring summit this September

by admin | May 25, 2021 | Muslim World

Over 200 industry leaders are expected to converge at the two-day summit in Dubai that will see a keynote address by H.E. Dr. Fahad Alshathri, Deputy Governor – Supervision, Saudi Arabian Monetary Authority.

Dubai, UAE: Middle East Global Advisors, a leading financial intelligence platform spearheading the development of knowledge-based economies in the MENASEA markets, will convene The Corporate Restructuring Summit (CRS) 2018, the GCC region’s first Debt Restructuring and NPL-focused Summit, on September 05-06 at the Sheraton Grand Hotel in Dubai, UAE.

Addressing the theme of “Optimal Management of Financial Restructuring & Non-Performing Loans”, the summit’s vision is to facilitate an enabling environment to address the key challenges of restructuring and strategic reorganization of finance and debt-related issues. The critical insights thus gathered will thereby enable organizations with new perspectives to effectively tackle corporate credit challenges.

With IFRS-9 and the pressure from NPLs creating a strain on banks and leading corporates increasingly defaulting on loan re-payments, corporate workouts and financial restructuring have become the norm to aid organizations with troubled balance sheets to combat debt delinquencies and defaults across key sectors comprising contracting, insurance, real estate and energy, amongst others. According to a recent prediction by Moody’s Investors Service, non-performing loans could reach 5.5 or 6% of total gross loans in the UAE, an increase from the 5.3% recorded in June 2017, a figure that stands at the higher end of the scale as compared to its Persian Gulf Arab Counterparts.

Economic stability continues to be a high priority area for the UAE with a notable recent development being UAE Vice President and Dubai Ruler Sheikh Mohammed bin Rashid Al Maktoum ordering the formation of a committee to oversee the financial restructuring of companies in the country.

Key Industry Veterans from leading banks and corporates will headline The Corporate Restructuring Summit 2018 as it aims to spearhead discussions gravitating around the two high-stake areas of effective NPL management and debt restructuring. The confirmed industry leaders at the summit include: H.E. Dr. Fahad Alshathri, Deputy Governor – Supervision, Saudi Arabian Monetary Authority; Majed Essa Al Ajeel, Chairman, Kuwait Banking Association & Burgan Bank; Simon Charlton, Chief Restructuring Officer & Acting Chief Executive Officer, Ahmad Hamad Al Gosaibi & Brothers; Dr. Nasser Saidi, President, Nasser Saidi & Associates; Christopher Maclean, Group Chief Risk Officer, Al Rajhi Bank; Manoj Chawla, General Manager – Risk, Emirates NBD; Murat Sultanov, Senior Financial Sector Specialist, Finance Competitiveness & Innovation (FCI) Global Practice, World Bank Group; John Iossifidis CEO, Noor Bank; Naveed Kamal, Managing Director, Citi Bank N.A.; Ravi Murthy, Group Chief Financial Officer, Arabtec Construction LLC & Bruce Wade, Chief Risk Officer, National Bank of Bahrain, among others.

Speaking ahead of the summit, Simon Charlton, Chief Restructuring Officer & Acting Chief Executive Officer, Ahmad Hamad Al Gosaibi & Brothers, said, “As Saudi Arabia looks forward, with Vision 2030 and the incredible pace of social and economic change, attracting foreign investment is likely to be important. Of course, no one invests looking for trouble, but it can happen and when it does investors and other stakeholders want to know there is legislation and more importantly a viable process to unwind situations and extract value while preserving jobs, livelihoods and allowing good businesses to survive. Perhaps somewhat in the shadows of some or the more headline grabbing changes Saudi Arabia has come a long way in implementing new legislations including new enforcement law, arbitration law and the now a bankruptcy law and to a certain extent we have served as the petri dish and testing ground for this dramatic advancement and change. As the economy develops and the traditional family businesses change and restructure, I am hopeful that we will achieve our goals and also set a pathway for others to follow and as encouragement for foreign investment in Saudi Arabia.”

Expressing his views on GCC’s corporate restructuring environment, Nasser Saidi, President, Nasser Saidi & Associates, said, “Global debt across governments, non-financial corporations and households surpassed $160 trillion as at the end of 2017, while the GCC’s regional debt market accelerated to around $70 billion in issuance, supported by the sovereigns. As we gradually exit the era of quantitative easing, into one with looming trade wars, volatile energy and commodity markets, and rising debt, we need to brace ourselves for loan defaults and potentially more restructurings. Corporate restructurings are often associated with job losses, but it is important to understand that is also associated with positive growth via increased investment and capital productivity in the medium term, outpacing the immediate negative effects. The GCC region is in an era of transformation.”

Speaking on the importance of widening SME access to finance, Murat Sultanov, Senior Financial Sector Specialist, Finance Competitiveness & Innovation (FCI) Global Practice, World Bank Group, said, “Access to finance for firms especially small and medium ones is quite constrained in the developing world. Modern secured transactions and collateral registry platforms are proven tools to increase access to credit for unserved and underserved companies and entrepreneurs leading to better quality of loan portfolios for banks, lower NPLs, higher recover rates in case of default and greater financial system stability overall. The presentation will focus on showcasing World Bank Group’s recent experiences and practices in promoting movable asset based lending reforms globally and in the MENA region”.

Fresh from a major corporate restructuring, Ravi Murthy, Group Chief Financial Officer, Arabtec Construction LLC, said, “In business, poor performance or bad management leads to bankruptcy. Attempt should be made to avoid this situation and the only available option is restructuring. Only financial/ Balance Sheet restructuring OR organizational restructuring may not bear desired results. There must be a balanced combo of Financial as well as organizational/management restructuring.”

The two-day summit will see keynote addresses by H.E. Dr. Fahad Alshathri, Deputy Governor – Supervision, Saudi Arabian Monetary Authority and Dr. Nasser Saidi, President, Nasser Saidi & Associates; an exclusive interview discussing the financial restructuring of the Al Gosaibi Group with Simon Charlton, Chief Restructuring Officer & Acting Chief Executive Officer, Ahmad Hamad Al Gosaibi & Brothers; CEO panel on resolving GCC’s challenge of accumulating bad debt and key panels on debt resolution, insolvency, effective NPL management, trends in consolidation and restructuring, among others.

The summit is expected to draw participation from over 200 prominent banks, corporates, legal-advisory firms, hedge funds, investment banks and debt restructuring specialists from across the GCC onto one platform by spearheading actionable debate, impactful change and high-level outcomes.

“Corruption, uncertain policies remain key concerns on India”

by admin | May 25, 2021 | Interviews

By Meghna Mittal

New Delhi, (IANS) Fiscal consolidation and moderate inflation are definite pluses for India, but graft, uncertain policies and their weak execution remain key constraints, according to Moody’s Investors Service.

In an e-mail interview with IANS, Marie Diron, senior vice president for the Sovereign Risk Group, said the agency’s assessment of India is based on its own evaluation, as also that of the World Bank on government’s effectiveness, rule of law and inflation control. This is what she said:

“India’s score are in the moderate range, reflecting checks and balances between the executive, legislature and judiciary, and increasing fiscal and monetary policy transparency,” she said.

“However, corruption, policy uncertainties and slow implementation have constrained our assessment of India’s institutional strength.”

Moody’s also expected fiscal consolidation to be gradual — as a result of specific measures on which a consensus can be reached, rather than broad-ranging fiscal strategies. So high levels of government debt, at around 65 percent of GDP, will continue to be a constraint on India’s rating.

“Besides the implications of fiscal policy for the government debt burden, the broad macroeconomic policy context has become more favourable to sustain growth. The government’s repeated commitment to fiscal consolidation contributes to maintaining inflation at moderate level.”

On the external sector, Diron said the impact on India of China’s rebalancing, the general and economic developments there will be mainly indirect. This because the share of India’s exports to China is much lower — around 3.7 percent — than for some other economies in the region.

“As a result, India would be affected by a slowdown in Chinese demand mainly to the extent that the global economy would be affected. Moreover, if such a slowdown were to lead to renewed falls in commodity prices, India as an importer of commodities would benefit,” Diron said.

“Further, China’s rebalancing may contribute to global volatility in capital flows. However, with narrower current account deficit financed by foreign direct investment, India is less vulnerable to a shift in investor sentiment and global capital flows than it would have been few years ago.”

Diron’s assessment comes against the backdrop of the caution by Moody’s Investors Service that a prolonged worsening in asset quality of state-run banks was the main threat to India’s sovereign credit profile, while suggesting that the government must recapitalise them with more money.

Moody’s, which has given for India a credit rating at ‘Baa3’ — or just a level above the junk category — had said on Wednesday that it would consider a rating upgrade after 12-18 months, depending on improvement in macroeconomic parameters in India.

Nonetheless, its outlook on the country remained positive.

“Our positive outlook on India’s rating is based on our expectations of continued but gradual policy efforts to reduce the sovereign risks posed by high fiscal deficits, volatile inflation and weak bank balance sheets.”

(Meghna Mittal can be reached at meghna.m@ians.in)

‘Indian auto sales to cushion lower sales in BRIC region’

by admin | May 25, 2021 | Business, Emerging Businesses

Chennai:(IANS) A rebound in automobile sales in India next year is expected to mitigate the impact of declining or lower sales growth in BRIC nations, the global rating agency Moody’s Investor’s Service has said.

In its research report, Moody’s on Monday said the global auto sales will improve in 2016 with steady growth in the US and strong sales in Western Europe.

This would mitigate the sharply lower sales in Japan and slowing growth in China.

According to Moody’s, declining auto sales in Brazil and Russia will place a further drag on auto sales growth, although a rebound in India will somewhat mitigate the effect in Brazil, Russia, India, and China, or the BRIC countries.

“Although key auto markets are demonstrating very different rates of growth, aggregate global demand should continue to support a stable outlook,” said Bruce Clark, a senior vice president of Moody’s.

“The pronounced variance in regional demand patterns highlights the benefits of auto manufacturers maintaining a broad geographic footprint,” Clark further noted.

The rating agency forecasts global light vehicle sales of 2.5 percent in 2016, an improvement from 1.2 percent in 2015.

“Despite its slowing economy, China will be a significant driver of this growth, as a looser monetary policy and stabilising real estate market push Chinese auto sales to comprise 27.8 percent of global auto sales in 2016, up from 27.1 percent of sales in 2015,” Moody’s said.

Although economic conditions remain challenging in China, Moody’s expects the auto market to recover, with auto sales growth expected to reach 5 percent in 2016, up from 1.9 percent in 2015, according to the report “Global Automotive Manufacturers: Auto Sales to Rebound Modestly in 2016 After China Growth Slowdown”.

In addition, steady growth in the US will help boost global auto sales. Although the pace of growth has slowed in the US, it remains broadly steady, slowing only slightly to 2.4 percent in 2016 from 2.8 percent in 2016.

Higher new sales growth in Europe will also contribute to the rebound in global auto sales, with sales rising 6 percent in 2015 and 2.8 percent in 2016, Moody’s said.

Despite Moody’s forecast for low economic growth in the euro area, double-digit demand in Spain and higher-than-expected growth in Germany, Britain, France and Italy will boost sales in the region.

However, the sharp contraction in sales growth in Japan in 2015 will offset global growth to a degree.