IslamicFinance.de

Thousands of people attended the first day of an auction of vehicles owned by indebted Saudi Arabian tycoon Maan al-Sanea. Officials say the sale will go towards repaying about 18 billion riyals (US$4.8 billion) owed to creditors. The businessman was detained by authorities last year for unpaid debt dating back to 2009 when his company, Saad Group, defaulted on payments. The first phase of the auction was launched this week, with around 900 vehicles including lorries, buses, diggers, forklift trucks and golf carts. Later stages of the process will include property, as well as machinery, ceramics and furniture. Prospective buyers were mainly businessmen from local construction companies and other contractors. Money raised from the first phase of the auction will go towards repaying creditors. Priority for the repayment will first go to repaying unpaid workers, vendors and other companies owed money will be given next priority, with banks at a later stage.

Saudi authorities are preparing to auction billions of dollars of real estate and cars belonging to billionaire Maan al-Sanea. This is the latest signal that Saudi Arabia is serious about holding its elites to account. In an anti-corruption crackdown last November, authorities detained several senior officials on charges of alleged graft. The al-Sanea case is separate from the main anti-graft campaign. The businessman was detained for unpaid debt dating back to 2009 when his company, Saad Group, defaulted on debts. Creditors have spent the past nine years pursuing Saad for debt that some estimate to be between 40 billion riyals ($10.67 billion) and 60 billion riyals. Al-Sanea's real estate in Khobar was valued at around 4.4 billion riyals. Authorities are preparing an auction to sell his vehicles, equipment, a large quantity of building materials and some property before the month of Ramadan.

Islamic loans from Europe, the Middle East and Africa fell to a five-year low with banks reluctant to borrow amid concerns Europe's budget crisis will roil markets as Arabian Gulf borrowers restructure debts.
Since 2007, Islamic loan issuance has slowly dropped. The main reasons are the threat of sovereign defaults in Europe and the faltering global economic recovery deter lending.
Saad Group and Ahmad Hamad Algosaibi & Brothers Co, both based in the Saudi Arabian oil-producing city of Al Khobar, are reorganizing debt. The two companies failed in 2009 after borrowing a total of $15.7 billion (Dh57.6 billion) from more than 80 banks, including HSBC and Credit Agricole SA.

Press Release

DUBAI, July 22, 2009--Standard & Poor's Ratings Services found the exposure to the Saad and Algosaibi groups of 30 commercial banks it rates in Gulf Cooperation Council (GCC) countries to be significant but manageable, according to its report "Special Standard & Poor's Survey Shows That Rated Gulf Banks Are Significantly Exposed To The Saad And Algosaibi Groups."

The two prominent Saudi Arabian groups recently ran into severe and unexpected difficulties and have entered debt restructuring discussions with their respective creditors.

"Total exposure net of tangible collateral to the two groups is significant but manageable for sampled rated GCC banks," said Standard & Poor's credit analyst Goeksenin Karagoez.

Information related to each individual Gulf bank's exposure is confidential--and as such can not be disclosed by Standard & Poor's--but our survey enabled us to arrive at various opinions:

Exposure to the groups varies significantly among the sampled GCC rated banks, from no exposure to net exposure of more than 20% of a few banks' adjusted total equity.

Kuwait Finance House, has minimal exposure to two troubled Saudi firms, belwo 0.1 % of the total credit portfolio, according to Emad Yousef Al-Monayea, Managing Director of Kuwait Finance's subsidiary, Liquidity House.

Saad Trading Contracting & Financial Services Co.’s debt securities, known as sukuk, are trading for 25 cents on the dollar compared with this year’s high of 79 cents on Feb. 26, data compiled by Bloomberg show. Saad Group on June 2 appointed BDO Capital Finance to advise the company on restructuring plans after the Saudi central bank last month froze bank accounts of al-Sanea and his family members, reported Haris Anwar on Bloomberg.

Saudi billionaire's firm denies that Kuwaiti assets are frozen; as Kuwaiti newspaper Al Rai had reported previously.

Andrew England in Abu Dhabi and Abeer Allam in Riyadh reported in the Financial Times about the Saudi conglomerate owned by Maan Al-Sanea.

The statement by Saad Group – its first admission that it is facing difficulties – came after bankers said the Saudi Arabian Monetary Agency (Sama) had frozen the personal accounts of Mr Sanea and members of his family.

IslamicFinance.de: Saad Group is related to the Golden Belt Sukuk. No information was given in the article hereto.

Press Release

LONDON (Standard & Poor's) May 22, 2009--Standard & Poor's Ratings Services said today that it revised to negative from stable its outlook on Saudi Arabia-based Saad Group and related entities, owing to our view of its increased real estate exposure resulting in the reduced liquidity and geographic diversity of its portfolio. At the same time, the 'BBB+/A-2' corporate credit ratings were affirmed.

The outlook revision reflects our view of Saad Group's reduced portfolio liquidity and diversity, with real estate holdings in Saudi Arabia constituting a substantially larger portion of Saad Group's asset base than previously. Due in part to current economic conditions, we are applying more conservative metrics for Saad Group's ratings, by altering our previous treatment of some of Saad Group's assets and liabilities. We also lowered our loan-to-value (LTV) threshold for the rating to 25% from 30%.