Business | Banking
Debts of two big Saudi groups exceed estimates
Affiliates of Saad Group and Al Gosaibi Group - two family-owned Saudi companies that are restructuring their debts - owe at least $860 million (Dh3.1 billion) more than what were previously reported.
- Bloomberg
- Published: 23:26 July 3, 2009
Dubai: Affiliates of Saad Group and Al Gosaibi Group - two family-owned Saudi companies that are restructuring their debts - owe at least $860 million (Dh3.1 billion) more than what were previously reported.
The two groups have borrowed a total of $7.43 billion (Dh27.2 trillion) through syndicated loans from 88 international banks, including BNP Paribas SA, Citigroup Inc. and Arab Bank Plc, according to a document provided by one lender.
An earlier list showed $6.62 billion (Dh24.3 billion) of loans to the two closely held groups.
The loans may add to the losses of global banks that have reported almost $1.5 trillion (Dh5.5 trillion) of credit losses and writedowns in the past two years.
"A $200-to-$300 million loss for a large regional bank is material but not life threatening," said Raj Madha, Director of Equity Research at EFG-Hermes Holding SAE, an Egyptian investment bank.
Banks have provided at least $64 billion (Dh235 billion) to Saudi borrowers in the past five years as record oil prices spurred economic growth for the world's biggest crude exporter, according to data compiled by Bloomberg.
Many of those lenders now risk losses as the country's first recession in a decade threatens the wealth of some of the kingdom's most powerful families.
The new list shows that Awal Bank, a Bahrain-based unit of Saad Group, borrowed an additional $610 million (Dh2.2 billion) from 33 banks that participated in two syndicated loans.
Two Al Gosaibi units borrowed another $250 million (Dh918 million) from 34 banks, according to the spreadsheet, which shows lenders' commitments on eight loans.
When asked whether the borrowing cited in the new spreadsheet was correct, a London-based spokesman for Saad Group said only that the company is in contact with creditors as part of its debt restructuring process. He declined to be identified, citing company policy.
Al Gosaibi Group didn't respond to telephone and e-mail requests for comment on this story.
Zawya Dow Jones, a news service that covers Middle Eastern financial markets in English and Arabic, reported the new loan totals, citing unspecified documents.
Saad Group said on June 2 that it was planning an "orderly restructuring" of its debt after it was affected by a "short-term liquidity squeeze".
The same day, Moody's Investors Service withdrew its ratings for the company, citing a lack of "adequate" information.
Al Gosaibi said on May 28 that it hadn't made payments to creditors of its Bahrain-based lender, The International Banking Corp., "pending a debt restructuring exercise".
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