Despite the high volumes, the appetite for lending to Gulf banks remains strong.
Emerging market debt specialists have turned to the Middle East as a well-priced, lower-risk area of opportunity. ‘Firm oil prices, comparatively stable politics and well-established institutions have made the region’s banks stand out clearly from the backdrop of other emerging market borrowers, ‘ says one banker involved in a number of deals. ‘They’re offering excellent credit quality and good prices.’
Eight term loans, totalling almost $1,600 million, have been taken to market over the last two months. All have margins between 37.5-60 basis points (bp) over Libor, and half are in the 40-45 bp range. Heavy oversubscription has been reported at the coarranger stage of all the facilities and, as a result, three, so far, have been increased in size.
The five-year loan for Arab Banking Corporation (ABC) was signed on 9 June, having been increased to $400 million from $300 million. Some 33 institutions took part in the syndication (MEED 16:6:00).
Demand was so strong at the co-arranger level for the $200 million, five-year facility for Arab Petroleum Investments Corporation (Apicorp) that allocations will be reduced and the loan will not go to syndication. Some 12 banks came in at the co-arranger level, six regional and six international.
‘Our experience on most of these loans has been very positive, ‘ says the banker. ‘With good credits and a healthy appetite, we’ve really not had too much stomach-acid in recent weeks. Long may it last.’
Similarly, the syndication of the Bank of Bahrain & Kuwait (BBK) loan received a warm response. The three-year loan, with options for extensions to five years, was originally to be worth $100 million, but commitments totalling $175 million were received at syndication and bankers involved in the deal say there is a strong probability that the facility will be increased to about $125 million. Such a move would echo the decision by Commercial Bank of Qatar to increase its three-year facility to $120 million from $100 million in late May (MEED 2:6:00).
All the arrangers are in place for the $300 million facility for Gulf International Bank (GIB). As with the other deals, demand was high with 16 institutions taking $15 million each, and another $10 million. Once again, foreign participation was extensive with, including the lead arrangers, 14 of the 22 institutions involved in the deal coming from outside the region.
The $100 million loan for Oman International Bank has been launched to coarrangers. ‘We have about a dozen institutions that are looking at it closely and seriously, ‘ says one banker involved. ‘We are moving ahead smoothly and quickly.’
Also to receive a warm response was the syndication of the $100 million facility for the UAE’s MashreqBank. It is understood that commitments totalling about $150 million have been received, but it is unclear as to whether the size of the loan will be increased.
The facility is MashreqBank’s debut and is as much a vehicle for raising the bank’s profile internationally as it is for boosting liquidity, says a banker following the deal.
For details of the size, pricing, tenor and lead arrangers of all eight of the term loans see MEED 16:6:00.