Banks including Standard Chartered Bank, HSBC and Calyon are understood to be among those that have held talks with Qatar Steel over taking on the financial advisory role for the project, which could be a precursor to the deal coming back to the market in 2009.

The company had originally appointed accountant Ernst & Young as financial adviser on the project and it began seeking bank support in September 2007.

However, as the credit market deteriorated following the onset of the global credit crunch, the banks raised concerns over both the pricing on the debt and the protection available to lenders, which eventually led Qatar Steel to pull the deal from the market (MEED 21:9:07).

It was decided shortly afterwards to replace Ernst & Young with a new adviser. Although some early talks have been held with potential new advisers, no new appointment has been made.

“We expect that an appointment of a new adviser could be made towards the end of the year, which would then mean a deal could come to the market later in 2009,” says one source close to the talks.

Qatar Steel hoped that by leaving the project financing until 2009, it would allow the debt market to recover and margins to improve. The existing finance package was financed at 80-100 basis points over the London interbank offered rate (Libor).