Bonds of Ezdan Holding Group slumped after S&P Global Ratings said Qatar’s biggest property developer faces the risk of a default or debt restructuring.

​S&P cut Ezdan’s rating to CCC from B- with a negative outlook, reflecting narrowing liquidity and high debt balances, which it said could lead to a distressed exchange, debt restructuring or default over the next 3-12 months.

Ezdan didn’t immediately respond to emails seeking comment. The company’s dollar bonds due in May slid by 5.6 cents to 92.29 cents on the dollar, the biggest decline in 10 months.

Ezdan’s $500 million senior unsecured sukuk matures on May 18. The property developer also has about 900 million riyals ($245 million) of secured debt maturing in 2021 and 2.7 billion riyals of sukuk and debt maturing next year, according to S&P.

“Without a committed refinancing plan or an equity contribution from its shareholder, we do not believe that Ezdan has sufficient cash or liquid assets on its balance sheet to repay its debt,” the ratings company said.

Tadawul Holding Group, Thani bin Abdullah Al Thani and Imtilak Real Estate own 94% of Ezdan’s shares, according to data compiled by Bloomberg.

​The developer’s shares slumped 8% in early trading, before trimming losses to 2.1%. The stock has underperformed Qatar’s main stock index so far this year.

Abdul Kadir Hussain, the Dubai-based head of fixed-income asset management at Arqaam Capital, said it’s not clear that a default is the only option.

“Ezdan has struggled with a difficult market in Qatar due to the pandemic and prior to that the boycott,” he said. “However, the boycott is over and the pandemic situation will improve with vaccines, so the outlook is definitely better for the company.”

S&P expects Ezdan’s operating performance to “improve slightly” in 2021-2022, but not enough to materially reduce the very high leverage.

— With assistance by Netty Idayu Ismail, Filipe Pacheco, and Ben Bartenstein