Advanced Theory & Practice of Bonds

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1-2 December 2021

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Qatar’s Ezdan Holding Group has been downgraded to CCC from B- by S&P, which mentioned that the property developer faces a risk of debt restructuring or default as they are yet to obtain credit-lines to meet upcoming maturities of its $500mn senior unsecured sukuk due May 18, 2021. The company also has about QAR 900mn ($247mn) of secured debt maturing in 2021 and QAR 2.7bn ($740mn) of sukuk and debt maturing in 2022. S&P has a negative outlook on Ezdan citing “narrowing liquidity and high debt balances, which could lead to a distressed exchange, debt restructuring, or default over the next 3-12 months.” The rating agency added that while they expect operating performance to improve in 2021-22, it will not be enough to materially reduce their high leverage – Ezdan has QAR 14.6bn ($4bn) in debt and adjusted debt-to-EBITDA at ~18.1x as at end-2020 vs. 14.5x in 2019. S&P also mentioned that it could lower the rating further if Ezdan engages in a distressed debt restructuring/exchange or misses a coupon/principal payment. Investors do not seem too concerned given that its 4.375% sukuk due in May was slightly higher by 0.2 to 98.25 while its 4.875% sukuk due 2022 was down 0.4 to 98.13, yielding 6.7%.

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