Moody's withdraws Saad Group ratings
Dubai, June 3, 2009
Moody's Investors Service said it has withdrawn all ratings for Saudi conglomerate Saad Group 'due to lack of adequate information' thus dealing a new blow to the crisis-hit Saudi conglomerate.
The ratings withdrawn included the B1 issuer ratings of Saad Trading Contracting & Financial Services Company, Saad Investments Company Limited and Saad Group Limited and the B1 debt ratings on issuance of Golden Belt 1 Sukuk Company.
'The ratings have been withdrawn because Moody's believes it lacks adequate information to maintain the ratings, the agency said in a statement.
Moody's previous rating action on the Saad Group was on June 1 when the rating agency downgraded the ratings of the Saad Group to B1 on review for further downgrade.
The announcement came soon after Saad Group, headed by major HSBC stakeholder Maan Al-Sanea, said it was planning an 'orderly restructuring' of some of its companies' debt, citing liquidity issues linked to the global crisis.
Just days earlier, Saudi Arabia's central bank, without explanation, had ordered local financial institutions to freeze Al-Sanea's accounts and those of five of his relatives, including wife and children.
Al-Sanea, who holds an three per cent stake in HSBC, is listed by Forbes as the world's 62nd richest man.
The agency cited the Saudi Arabian Monetary Authority's May 31 order to freeze Al-Sanea's accounts, saying that 'the events of the past few days have resulted in heightened risk of default at entities of the Saad Group, if they face increased contagion from disputes originating from the shareholder.'
The ratings action, and Saad Group's debt restructuring push, offered another indication that some of the oil-rich kingdom's privately held conglomerates, which are shrouded in secrecy and are largely family owned, may be struggling more seriously than many had believed.
Saad Group has declined to comment on the move by the central bank. But the company, in the first indication since the order that it faced debt issues, said it was planning an orderly restructuring of its companies' debts.
It, however, did not specify the amount, but said it was completing arrangements with a European bank to co-ordinate the effort.
Saad Trading, Contracting and Financial Services Company Limited Partnership, headquartered in Al Khobar in Saudi Arabia, is a privately-owned company with origins in construction and real-estate development.
The company, which also holds a material investment portfolio, had total assets of $13 billion at the end of 2008.
Saad Investments Company Limited, incorporated in the Cayman Islands, is a privately owned international investment vehicle focusing on various financial asset classes. At year-end 2008, it had total assets of $9.1 billion.
Golden Belt 1 Sukuk Company, registered in Bahrain, is a special purpose vehicle set up for the sole and exclusive purpose of issuing Sukuk on behalf of Saad Trading Contracting & Financial Services Company.
Saad Group Limited, based in the Cayman Islands, is set to become the ultimate parent of Saad Trading, Contracting and Financial Services Company, and other subsidiaries of the Saad Group. The group had total assets of $30.6 billion at the end of 2008, it added.
For the assignment of the ratings, Moody's has used its Global Investment Holding Companies methodology published in October 2007 (www.moodys.com) in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory.-TradeArabia News Service