‘As is fairly common practice with banks, BMB had been planning from early this year on approaching the syndicate for a refinancing of our $75 million medium-term loan – and had in fact mentioned this to some of the banks as early as March this year,’ says a BMB official. ‘Unfortunately, the timing of our meeting with the syndicate coincided with the events surrounding BIB [Bahrain International Bank], as well as the threat of a potential war in Iraq. Banks and rating agencies alike have reacted to this current environment (by reducing exposure to BMB and downgrading BIB), both of which aspects have aggravated our current situation and our negotiations with the syndicate. Negotiations are moving forward, however, and we hope to come to an agreement soon.’

International ratings agency Fitch Ratingson 4 October lowered BMB’s long-term foreign currency rating to CCC from B+, its short-term foreign currency rating to C from B and its individual rating to E from D/E.