MEED's annual survey of financial institution (FI) loans and bonds illustrates clearly the heightened activity. The syndicated loan market ballooned once again in 2005 to some $4,700 million, compared to about $3,000 million in 2004. But even more marked was the leap in bond issuance, up by more than $3,000 million to about $7,300 million, largely down to a string of issues of the in-vogue euro medium-term note (EMTN) instrument.

Saudi banks are especially prominent in the burgeoning market. Indeed, only sectoral minnow Bank al-Jazira and Islamic newcomer Bank Albilad have yet to set out concrete plans. Al-Rajhi Bank, Arab National Bank, Banque Saudi Fransi and Saudi Investment Bank all tapped the syndicated loan market in 2005, following the trail blazed by Samba Financial Group and Saudi Hollandi Bank at the end of the previous year. The National Commercial Bank staged the first drawdown of an EMTN programme, while Saudi British Bank issued the kingdom's first eurobond. Riyad Bank and Samba have both mandated arrangers for EMTN programmes and are due to take to the road by the end of the first half.

The UAE also saw a flurry of issuance towards the end of 2005, with Abu Dhabi Commercial Bank, NBAD and National Bank of Dubai all staging debut drawdowns - and competing to achieve the finest price. The gradual decrease in launch spreads is evidence of the increasing comfort of international investors - at which the paper is predominantly aimed - with GCC credit. Mashreqbank, the federation's EMTN pioneer, is due to return to the market imminently. 'Among the trends that you are likely to see in 2006 is early GCC entrants to the market updating their programmes and coming back to investors,' says an international investment banker. 'Spreads are about half what they were two years ago. The beginning of issuance in euros or sterling is also being discussed.'

BandwagonBanks elsewhere in the Gulf are looking to jump on the bandwagon. Bank of Bahrain & Kuwait became the first domestic Bahraini bank to issue an EMTN in early March. Like the late-2005 paper from Manama-based Arab Banking Corporation it was structured slightly differently from the others, due to Bahrain Monetary Agency (BMA - central bank) regulations on the status of such instruments should the issuing bank fall into difficulties. And regulatory change is likely to precipitate the first EMTNs out of Qatar in the coming year. 'In the past these didn't count towards our loan/deposit ratios, so there was no point,' says a Doha-based banker. 'But the Qatar Central Bank changed the rules in December so we can count EMTNs when lending.'

The blossoming of the EMTN landscape has propelled prominent international banks to the top of the FI bond and loan arranging league table. HSBC is out in front again, with a deal share of $2,300 million. But more notable are the changes further down the table. Barclays Capital comes from nowhere to take second place, largely on the back of EMTN mandates. Likewise, Deutsche Bank, which was outside the top 15 in 2004, was the third biggest arranger. And the likes of Credit Suisse First Boston and UBS make their debut.

There is a notable dearth of regional banks compared to last year, with only Gulf International Bank (GIB) figuring. This is partly due to the EMTN phenomenon, where