It is understood that six banks have been mandated to lend $600 million on a club basis. Banks understood to be involved include Arab Banking Corporation, Gulf International Bank, National Bank of Bahrainand Bank of Bahrain & Kuwait. The two other participants have not been identified.

The terms of the facility are yet to be disclosed, but it is likely that the five-year borrowing will have a margin higher than the 52.5 basis points over Libor being offered on the $450 million state of Qatar borrowing currently in syndication (MEED 5:4:02).

'It would be very odd if Bahrain could tap the market cheaper than Qatar, given the strength of the latter's credit story,' says an international banker. 'But then again, it's very odd that Qatar is paying as much as it is for its current loan - it should have got this a lot cheaper.'

US-based credit rating agency Moody's Investors Servicehas issued long-term foreign currency ratings of Baa2 to Qatar and Ba1 to Bahrain.