Agency downgrades Gulf Finance House

03 February 2010

Bahrain bank put deeper into junk bond status

Bahrain’s Gulf Finance House has been downgraded six notches by Standard & Poor’s (S&P) to a CC rating, as a result of the banks inability to repay a $300m loan due on 10 February.

The downgrade is the second time since the start of the year that S&P has lowered the rating on the company. On 14 January S&P downgraded the firm to B+ from BB+.

“The downgrade and negative outlook reflect our view of Gulf Finance House’s very weak liquidity position because of the bank’s inability so far to put into place measures to strengthen liquidity,” said Goeksenin Karagoez, a credit analyst at S&P.

Trading in shares in Gulf Finance House on the Bahrain Stock Exchange was suspended on 3 February while the exchange awaited further details from the bank about its strategy.

The bank confirmed on 3 February that it was in talks to extend the repayment of $100m of its $300m loan due in February by six months. Talks with lenders in the facility were held in London on 2 February.

The bank added it was considering asset sales and cutting costs in an effort to shore up its finances.

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