At the start of the year, some Gulf bankers suggested the Middle East would be the most active region in the world for project finance.
At that point, the optimists felt the credit crunch would quickly be over and normality would return to the banking market.
However, the pessimists saw local dollar liquidity drying up and predicted that sponsors would be unwilling to accept the higher prices.
With more than half the year now gone, it is becoming clear who was right.
So far this year, about $28bn worth of project finance deals have closed in the GCC.
The figure has been helped by a couple of huge projects like the $10bn Saudi Kayan project.
Although the Kayan deal only closed recently, most of the banks involved had already committed funding to the project last year.
Getting commitments for new deals in 2008 has proved more difficult.
The revelation that some project finance departments have now been told by their bank’s senior management to restrict lending in dollars indicates how difficult the market has become.
With returns on short-term local-currency bond issues hitting more than 200 basis points over the London interbank offered rate (Libor), it is no surprise that project finance, with returns closer to 100 basis points over Libor, is often less attractive.
Last year, the top 10 financial advisers in the region raised nearly $53bn for projects.
Given the difficulty that some regional banks are now having in accessing dollars, and indications that the usual summer slowdown could last until October, it will be difficult for them to make up the difference in the second half of the year and match that performance.
Although sponsors may still be keen to raise project finance, the signs are that, if anything, banks are getting more nervous. This year at least, the pessimists appear to be right.