International and domestic banks are keen to lend in Kuwait, as the country moves from upfront cash investments to debt financing in response to lower oil prices.

Excitement initially focused around the Kuwait Authority for Partnership Projects’ (KAPP’s) pipeline of public-private partnerships (PPPs).

KAPP’s progress has since slowed, although bids for the Al-Zour North 2 independent water and power project (IWPP) are widely expected to be submitted in June. Given this timeline, the first financial agreements are not expected until well into 2017. Banks are also expressing discomfort over certain clauses around recourse in the case of the developer breaching the deal. This means negotiations could become lengthy.

In the meantime, the country’s oil, gas and downstream sectors are keeping bankers busy.

Local/US Equate Petrochemical Company and Kuwait National Petroleum Company (KNPC) are both working on loans totalling $5bn and $10bn respectively.

Lenders are expecting a steady stream of transactions in these sectors thanks to the government’s plans to invest $100bn in its oil industry. KNPC could invest as much as $25bn in the Al-Zour New Refinery Project (NRP) alone.

All of the debt will be for government-related entities, so international financiers will view the loans as very good quality.

With other GCC markets such as Saudi Arabia and Qatar unusually quiet, major banks are looking to Kuwait to earn advisory fees and increase their exposure to well-rated Kuwaiti risk.