Middle East investment grade companies will need to refinance approximately $91bn-worth of bank and bond debt due to mature over the next four years, according to new research from US rating agency Moodys Investors Services.
The regions debt accounts for about 8 per cent of the $1.17 trillion-worth of total debt due to mature across the Europe, the Middle East and Africa (Emea) region. This total figure comprises $322bn in bank debt and $788bn in bonds.
Investment grade companies in Germany, France and the UK currently account for a greater share of the maturing bank and bond debt than the all Middle Eastern investment grade firms combined, with each country accounting for 15 per cent of the total debt.
Despite this large trillion-dollar sum of debt across Emea, Moodys forecasts that the refinancing burden should be manageable.
Last year, European countries faced the greatest refinancing challenges, according to Moodys. But the agency anticipates that refinancing concerns will become more focused on Russia. It accounts for 10 per cent of total Emea bank and bond debt over the next four years. More than two-thirds of this is concentrated in the countrys energy sector.
Across the Emea region, investment grade companies are increasingly tapping the capital markets, rather than the bank market, for debt. But Moodys warns that an over-reliance on capital markets could limit their refinancing options if capital markets become disrupted by another crisis.
Out of the current debt owed by the Emea region, only 28 per cent is bank debt. This compares to 31 per cent last year, 32 per cent in 2012 and 2011, and 37 per cent in June 2010.
Saudi Basic Industries Corporation (Sabic) is one key Middle Eastern investment grade company facing large, long-term debt maturities over the next four years. It has SR12bn ($3.2bn) due in 2014, SR14bn due in 2015, SR17bn in 2106 and SR11.83bn in 2017.
A $1bn bond issued by Sabic in 2010 is maturing in 2015, and a $1bn bond issued in 2013 is due in 2018. Sabic also issued a Eu750m bond in 2013, but it matures outside Moodys forecast period in 2020.
The Saudi company posted its second quarter results in mid-July, announcing a 7 per cent increase in profit compared to the same quarter last year. It earned SR6.46bn in the three months ending June 30.