Bahrain-Based Gulf Finance House Raised to 'CCC-/C'; Outlook Negative

Press Release

*Bahrain-based Gulf Finance House earlier today completed the partial extension of a
$100 million facility. We consider this as another "distressed exchange" due to
partial extension of initial maturity. *We then reassessed GFH's creditworthiness
and raised the ratings to 'CCC-/C'. *The outlook is negative and reflects our
opinion of GFH's very weak liquidity position, from a rating standpoint, because it
still faces challenges to meet debt repayments coming due in the very near term.

PARIS (Standard & Poor's) March 3, 2010--Standard & Poor's Ratings Services today
said it raised its long- and short-term counterparty credit ratings on Bahrain-based
Gulf Finance House G.S.C. (GFH) to 'CCC-/C' from 'SD/SD' (selective default). The
outlook is negative.

"The rating action follows GFH's completion of the partial extension of maturity of
a $100 million facility," said Standard & Poor's credit analyst Goeksenin Karagoez.

The first tranche of this facility was a $50 million payment due March 3, 2010, with
the remainder due on March 3, 2011. We understand that GFH has obtained consent for
the partial extension from all lenders of the facility, which is set to be repaid in
five installments over the next two years. Under our criteria, we consider GFH's
maturity extension to be a "distressed exchange" and therefore tantamount to a
default because the new maturity represents a change to the facility's originally
scheduled payment terms.

"We subsequently reassessed GFH's creditworthiness by analyzing, among other things,
GFH's new liability structure, cash flow projections, and its overall business model
and strategy," said Mr. Karagoez, "and on this basis, we raised the ratings on GFH
to 'CCC-/C'. While the partial maturity extension of two facilities has somewhat
reduced the immediate and severe stress on GFH's liquidity situation, it remains in
our view very weak and will likely constrain the ratings."

With total assets of $1.6 billion on Dec. 31, 2009, GFH is an Islamic wholesale
investment institution based in the Kingdom of Bahrain (A/Stable/A-1).

"The negative outlook reflects our opinion of GFH's very weak liquidity position
from a rating standpoint, because it still faces challenges to meet debt repayments
coming due in the very near term," said Mr. Karagoez.

It also reflects the uncertainty we perceive regarding the ability of the
institution to implement its plan for improving its liquidity position and boosting
its revenues. Failure to meet any of the upcoming existing or restructured payments
would lead us to lower the ratings to 'D' (default). In addition, we would consider
as another distressed restructuring any transactions by GFH to reschedule or
restructure its debt, including unrated obligations, such that lenders receive less
than the original value. This would result in a lowering of the ratings to 'SD',
assuming GFH continues to honor its other obligations.

We would raise the ratings if GFH is successful in raising alternative sources of
liquidity to alleviate the currently difficult liquidity situation. To fully
alleviate liquidity pressure and therefore further improve its creditworthiness,
however, we believe that GFH would need longer-term funding sources and new business
activity because its debt structure is short-term and operating cash flow is


Rating Implications Of Exchange Offers And Similar Restructurings, Update, May 12,

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