Moody's: Gulf issuers face challenges

As the global financial and economic crisis reached the Arabian Gulf later than most other parts of the world, corporate issuers in the region largely remained in a financially strong position in 2008, Moody's Investors Service said in a new report.

However, as already evidenced by weaker financial performance in the last quarter of 2008, Moody's cautioned that 2009 will be challenging for issuers throughout the Gulf and Middle East, as companies face weaker global demand and scale back their investment plans to match lower cash flows.

Therefore Gulf-based corporate issuers, most of which are government-owned, are likely to face a further decline in credit quality, the agency said.

Rated Gulf corporations are not immune from the global financial and economic crisis, particularly when they rely on external demand for their goods and services or on fresh liquidity to support operations, Moody's said. Substantial alterations to most companies' business plans as they respond to the new environment should be expected, the agency added.

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