2008-12-23 — independent.co.uk
"The reputation of the Arabian Gulf as a financial hub was dealt a blow yesterday as Global Investment House (GIH), one of the region's biggest institutional investors, confirmed that it was unable to repay a $200m loan, and had appointed HSBC to renegotiate the deal, and its other debts, with international creditors.
Analysts had expected the Kuwaiti government to meet the obligation in order to save face in the international debt markets. Philip Smith, of Fitch Ratings, speaking before yesterday's announcement that the Kuwaiti government would not pay the loan, said: "The events of last week do come as a surprise because up to that point GIH had a good reputation and was very well regarded. It seems that it is very unlikely that culturally, a bank in the region would be allowed to fail, but this is slightly different as GIH is not quite in the same league as the banks. I can't imagine however, that the Kuwaiti government would allow GIH to default." Fitch cut GIH's rating from BBB, an investment grade level, to C last Monday."
Analysts had expected the Kuwaiti government to meet the obligation in order to save face in the international debt markets. Philip Smith, of Fitch Ratings, speaking before yesterday's announcement that the Kuwaiti government would not pay the loan, said: "The events of last week do come as a surprise because up to that point GIH had a good reputation and was very well regarded. It seems that it is very unlikely that culturally, a bank in the region would be allowed to fail, but this is slightly different as GIH is not quite in the same league as the banks. I can't imagine however, that the Kuwaiti government would allow GIH to default." Fitch cut GIH's rating from BBB, an investment grade level, to C last Monday."
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