GCC family business face credit rating and funding constraints

Ownership restrictions, corporate governance limitations and a lack of geographical or cash flow diversification are the key credit risk challenges faced by GCC’s family owned businesses from a rating perspective, said Martin Kohlhase vice president and senior credit officer of Moody’s. Despite such restrictions some of the long-established merchant families enjoy access to attractively priced sources of funding from local banks. Family-owned corporates often benefit from very competitive short-term domestic bank market funding rates suggesting they have a lower risk profile as compared to the ratings Moody’s would assign assuming a medium to long-term funding exposure.