MARKET TALK: Alternative Financing: Part One

Chiradeep Deb, managing director, head of corporate finance, DCM and Syndications at Mashreq Bank on governments asking contractors to provide financing packages – When you look at a contractor’s balance sheet, it’s heavy with contingent liabilities, debt that you actually don’t see on the balance sheet, and to top it, most of the revenues are already encumbered because it’s given around for the bonding lines.

So you have, pretty much, a balance sheet that has a certain level of capitalisation, but a lot of contingent liabilities and the top line already given away to certain banks. So for somebody to raise financing and for a bank to provide financing, it’s pretty much on a subordinate level to start off with. It’s definitely a challenge. Source: Mashreq Market Talk