The decline in project finance volumes in the Middle East and North Africa during the first half of 2014 compared with last year should not raise alarm bells among bankers.
The volume of deals signed in the first six months fell by 42.5 per cent year-on-year. But 2013s figures were skewed by the unusually large $20bn Sadara Chemical Company project, which was signed at the end of June.
A total of $16.6bn-worth of project financings were closed by the end of June this year, a figure that is in fact higher than the value recorded in the first halves of 2012, 2011 and 2009. This suggests the longer-term trend for project finance in the region has been moving in an upward direction since 2009.
The Middle East continues to be an appealing and strategically important market for project financiers, with two of the top 10 project finance deals signed in the first half of the year closed in the GCC.
Yet the second half of 2014 is unlikely to see a flurry of deals reaching financial close, with Abu Dhabis $1.5bn Mirfa independent water and power project one of the most notable deals expected to be concluded before the year ends.
However, the pipeline of prospective project finance deals for 2015 is looking relatively healthy. Oman in particular is attracting interest, with Oman Refineries & Petrochemicals Company (Orpic) pushing ahead with a several projects that could tap the bank market for financing. Lenders are also talking with prospective developers of forthcoming power and water projects in the sultanate.
Despite the slowdown, there is still plenty of business to be done in the region.