Project finance volumes in the Middle East fall in first half

10 July 2014

Market declines despite Saudi Arabia’s Maaden deal being second-largest deal signed globally

The volume of project finance deals signed in the Middle East and North Africa during the first six months of the year fell by 42.5 per cent compared to the same period in 2013, according to the UK-based data provider Dealogic.

A total of $16.58bn-worth of deals reached financial close in the first half of the year compared to a total of $28.8bn in 2013.

However, last year’s figures were significantly bolstered by the signing of the $20bn Sadara Chemical Company project in Saudi Arabia which closed at the end of June 2013.

This year’s figures are higher than deal volumes recorded before 2013, with $13.8bn and $10.5bn worth of transactions closed in 2012 and 2011 respectively.

Despite the decline in deals, the region has a strong pipeline of project finance facilities that are likely to be signed in 2015.

The Gulf region also remains a key market globally for project finance with 2 out of the top 10 deals signed in the first half of the year closed within the GCC.

The $5bn financing for the Maaden Waad al-Shamal Phosphate Company signed on 30 June was the second-largest project finance deal globally to be signed in the first six months.

The $3.8bn financing raised by Oman Refineries & Petrochemicals Co (Orpic) to support the Sohar Refinery Expansion and debt refinancing was the sixth largest finance deal to be signed.  

Bankers still see the region as a buoyant and increasingly competitive market for project finance.

“There is good local bank liquidity. You are seeing a lot of scale-backs on deals,” says one London-based banker.

The Emirates Steel $1.3bn project refinancing deal signed earlier this year was heavily oversubscribed, with many banks cut from the final lending group.

Oman is becoming increasingly attractive market for project finance deals, say bankers active in the region.

Forthcoming projects that could be project financed include Orpic’s $3.6bn Liwa Plastics petrochemicals project. Orpic is currently assessing bids for a financial adviser.

Omani water and power projects are attracting interest from project financiers, with work progressing on the Oman Power & Water Procurement Company’s (OPWP) independent power project known as Salalah 2 and its independent water project (IWP) at Qurayat.

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