Global drops its Standard & Poor's rating

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Global Investment House, the Kuwaiti investment firm that lost over $1bn in the fourth quarter of last year, decided yesterday to stop paying S&P to rate it. Not too surprising, in a way, given that Global bore the agency's lowest-possible mark. S&P had lowered Global's short- and long-term counterparty risk ratings from SD (i.e. selective default, meaning some of its loans were in arrears) to D (full default, meaning it was defaulting on lots of loans). Global now "will be subject to no further surveillance." Sounds like a reprieve in a KGB memo, but you get the drift. Release after the jump.

Global Investment House Lowered To 'D/D' From 'SD/SD'; Ratings Withdrawn At Company's Request

PARIS (Standard & Poor's) April 29, 2009--Standard & Poor's Ratings Services said today that it has lowered its short- and long-term counterparty credit ratings on Kuwait-based Global Investment House KSCC (GIH) to 'D/D' from 'SD/SD'. Subsequently, we withdrew the ratings at the request of GIH and the ratings will be subject to no further surveillance.

"The rating action reflects our understanding from GIH that it has defaulted on the majority of its financial obligations, as announced by the company in January 2009," said Standard & Poor's credit analyst Paul-Henri Pruvost.

This general default occurred following the triggering of cross-default clauses when GIH did not meet principal repayment on a $200 million syndicated loan due on Dec. 15, 2008. According to GIH, interest and coupon on financial obligations that came due since then were paid when they were due.

Standard & Poor's understands that the company, as announced in early March 2009, intends to undertake a restructuring of its debt obligations that we would consider as a distressed exchange offer.


According to our rating definitions, we assign a 'D' rating when we believe that any default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. Our default definition includes payment defaults on both rated and unrated financial obligations. In addition, under our criteria, we treat distressed exchange offers to restructure debt obligations as equivalent to a default on the part of the issuer, even though, technically, investors may accept such an offer voluntarily and no legal default occurs.

We assign an 'SD' rating when we believe that the obligor has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner.