The deal is a refinancing of an existing $1.2bn debt that was due to mature in 12 months. Ahli is refinancing the debt now to avoid the risk of the loan market becoming even more expensive.

Extending the period of the debt will also help the bank’s capital adequacy ratio, which measures its credit exposure and is a key factor used by regulators when assessing institutions.

The deal is expected to be syndicated among about 30 banks, including National Bank of Bahrain and Germany’s WestLB.

Most of the banks involved in the original deal have recommitted to the new facility, but at a lower level. Margins have increased from 32 basis points over the London interbank offered rate (Libor) on the original deal to 85 basis points over Libor.

The deal is structured so that the debt will continue under the terms of the original loan for another 12 months, at which point it reverts to the new terms for a further two years, meaning the loan will mature in 2011.

The new deal was arranged by Bayern LB, Commerzbank, Lloyds TSB, Mizuho and Royal Bank of Scotland. They had originally approached the market for $500m, but the facility is expected to close at $800m. “There was clearly strong appetite from the banks to remain in this deal despite the environment,” says one banker.