Kuwaiti investment bank defaults on debt

Bloomberg

Global is "in default on the majority of its financial indebtedness" after a capital-repayment default in December on one of its syndicated facilities and because of the "cross-default provision," the bank said yesterday in a statement to the London Stock Exchange, where its global depositary receipts are listed. Global continues to service all interest and coupon payments on time.

"Global was hard-pressed for solutions with all lenders and a bail-out was definitely not in the offing," M.R. Raghu, head of research at Kuwait Financial Center, said in a phone interview from Kuwait City yesterday. "This was not unexpected."

Kuwaiti banks are suffering from the worst global financial crisis since the Great Depression with Gulf Bank, Kuwait’s second-biggest bank by assets, announcing losses of 375 million dinars ($1.4 billion) from derivatives trading that sparked panic deposit withdrawals. It pushed the Kuwaiti government to guarantee deposits in all local banks.Global has outstanding short-term liabilities of $2.47 billion, according to Bloomberg data, most of it incurred from leveraged buyouts.