NBAD is acting as financial adviser to Shadeed and is seeking to appoint a group of up to eight lead arrangers with a view to reaching financial close with the group by the third quarter of the year.

However, bankers close to the deal say they expect the timescale on the financing to slip because of the traditional slowdown in activity over the summer months and the limited amount of dollar liquidity in the region.

Although it only requires a relatively small group of lead arrangers, NBAD is understood to have approached a large number of banks to ensure it gets the most favourable pricing possible.

Under current market conditions, project finance deals are being priced at 100-125 basis points over the London interbank offered rate (libor). The project cost will be split between about $260m in equity and $500m in long-term project finance debt.

Bankers who have seen the initial documents sent out by NBAD say it is seeking to raise the funding entirely in dollars, a move that some observers say could prove problematic. “Not many international banks have a relationship with the sponsor so they may not be that keen to finance this deal,” says one London-based project finance banker. “It could make it difficult raising this amount of dollars from local banks.”

The Shadeed project is being developed by the UAE’s Al-Ghaith Holdings, and will be the first integrated steel plant in Oman.