Despite low oil prices, Gulf Bank of Kuwait may see increasing demand for letters of credit (L/Cs) according to Capital Intelligence Ratings (CIR).

The ratings agency was talking about prospects for one of Kuwait's largest commercial banks after assigning a 'BBB' issue rating to the 100 million Kuwaiti dinar subordinated bond issue by Gulf Bank.

Infrastructure boom

The rating of the bond is supported by the rating agency's view that against a backdrop of increased geopolitical risks and low oil prices, the Kuwaiti government has not cut back on investment.

Rather, contract awards have been accelerating as long-delayed infrastructure investment is moving forward at a faster pace than at any time over recent years.

Wider benefit

This should mean greater corporate loan demand and more demand for both contract guarantees and import L/Cs.

According to CIR, this will benefit Gulf Bank and all banks in Kuwait.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.