The rankings also provide a useful insight into the changing shape of GCC financial markets. The FI syndicated loan market is a pale imitation of what it was. In 2003, a mere five deals were completed, compared with the 11 signed in 2000. There are three reasons for the shift. First, surging regional liquidity has allowed some banks to meet their existing loan obligations out of cashflow, rather than rolling them over, diminishing the appetite for credit. Second, some banks have found the route to market more difficult following the defaults on syndicated borrowings by Bahrain International Bank and BMB Investment Bank. Third, over the past two years an alternative route to liquidity has opened. Floating rate note (FRN) issuance, pioneered by National Bank of Kuwait in early 2002, continued last year with Gulf Bank staging its debut offering, and in the early months of 2004 both Mashreqbank and Emirates Bank International have tapped the market.

There are signs that other corporates are interested in raising capital in this manner: Dubai-based carrier Emirates staged a successful $500 million bond issue in early March.

Equally important in coming years will be the emergence of a vibrant sukuk market. With Bahrain and Qatar having established sovereign benchmarks, and the Islamic Development Bank an AAA-rated corporate landmark, the volume of issuance is set to rise rapidly. The UAE's National Central Cooling Company (Tabreed) has already tapped the market this year and other transactions are in the pipeline.

New liquidity

There is already an important distinction between regional and international sukuk and bond issuance. With the former, the heavy placement of paper with the banking sector and thin secondary market activity suggests the instruments are little more than a substitution for syndicated borrowing. The latter are a meaningful attempt to access new liquidity.

HSBC's strong position is likely to be challenged on multiple fronts. Arab Banking Corporation and increasingly Standard Chartered Bank will assert themselves in the syndicated loan market this year. Citigroup - among others - has shown a taste for sukuks already.