GCC Needs to Refinance $60 Billion of Debt in 2012, RBS Says

The six-nation Gulf Cooperation Council, which includes Saudi Arabia and the United Arab Emirates, needs to refinance $60 billion of debt between now and the end of the year, Royal Bank of Scotland Group Plc said.

“We don’t foresee any issues for refinancing” as these loans have “either been dealt with” or are being restructured or amortized, Jacco Keijzer, head of debt capital markets for the Middle East and Africa at RBS, said at a conference in Dubai today. The loans that need to be repaid this year include $7 billion by Saudi Basic Industries Corp. that “nobody worries about” and $3 billion from state-controlled Qatar Telecom QSC “which was more or less provided for last year,” he said.

Europe’s debt crisis had sparked concerns about the ability of GCC companies and banks to refinance debt this year on expectations European lenders would trim lending. Some banks in Europe have reduced lending although Gulf financial institutions have “dramatically stepped up their play and in a much stronger way than anybody expected them to,” Keijzer said.

There are still some concerns about Dubai’s DIFC Investments LLC’s ability to repay a $1.25 billion Islamic bond due in June and business park operator Jebel Ali Free Zone FZE’s 7.5 billion dirham ($2 billion) sukuk maturing in November, although the market’s perception is that the refinancing of these securities has been resolved, Keijzer said.

10 Mandates

RBS has about five to 10 mandates to manage bond and sukuk sales in the GCC, about half of which are from the U.A.E., the second-biggest Arab economy, Keijzer said. RBS was one of the arrangers of a $1.3 billion bond from Abu Dhabi’s Dolphin Energy Ltd. in February and the $500 million Islamic bond of Emirates Islamic Bank PJSC, a unit of U.A.E.’s biggest bank, in January.

RBS will focus on debt financing, risk management as well as its cash management and trade finance businesses in the Middle East after announcing a decision earlier this year to exit its cash equities and mergers and acquisitions business globally, Simon Penney, RBS’ chief executive officer for the Middle East and Africa, said at the conference today.

“We anticipate some very strong growth in trade finance,” Penney said. Trade flows from and to the GCC are shifting away from the West towards Asia and RBS expects to use its global reach to provide cash and trade finance solutions to multinational companies operating in the region, he said.

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