And the future will be on a different scale. Government-led reform programmes simultaneously targeting economic liberalisation, industrial diversification, infrastructure expansion and the stimulation of the private sector are themselves the key ingredients in another perfect storm. The step-change in the demands placed on private sector finance is unprecedented. MEED conservatively estimates the debt requirements of projects already under active development will exceed $30,000 million over the next two years (see table, page 6). Figure 1 puts that figure in context: there has been a steady and gradual increase in the region’s annual deal flow – the first nine months of this year have been busy. But the accelerator is about to be firmly pressed.

One of the main drivers for this – and, again, Qatargas illustrates the point – is the increase in the size of debt packages. While the mid-market is set to remain active over the next couple of years, the size and frequency of the mega deals are on the increase. Some of this shift is the direct result of the private sector being ushered into specific areas – such as power generation – where economies of scale and robust domestic demand-growth patterns dictate the construction of massive complexes. However, in other areas – such as the petrochemicals industry – regional sponsors have been growing more confident, and increasingly ambitious, in their ability to develop world-scale projects. Figure 3 tracks the ascent of the average size of structured finance packages. Big is beautiful across the Gulf.

One of the direct results of this upscaling has been the deployment of multi-tranche facilities. Just as the region’s governments are seeking economic diversification away from over-dependence on oil revenues, so the region’s project borrowers are learning to diversify away from their traditional reliance on commercial bank credit. The expected final shape of the Qatargas package is a clear example: $2,500 million of conventional debt will be supplemented with a $530 million Islamically structured tranche and some $1,000 million of US and Italian export credits. In addition, one component of the vertically integrated project – the receiving terminal at Milford Haven in Wales – will be part-financed by an entirely independent sterling-denominated long bond.

This multi-layered approach has been used with increasing frequency over the last five years. Its early guise came in the form of dual-tranche conventional and Islamic commercial packages, as deployed by Thuraya Satellite Telecommunications Company in 2000 and the Shuweihat independent water and power project (IWPP) in the following year. In 2003, an apogee was reached with the five-tranche structure for Aluminium Bahrain, which included everything from conventional and Islamic commercial debt to export credits, to a metals-trading facility and even a bond component. Full diversification was delivered. And as financing facilities continue to grow in size, the multi-tranche approach will become the norm rather than the exception.

However, the standout feature of the Qatargas deal is the old-fashioned commercial debt tranche and the list of banks in the mandated lead arranger (MLA) group. That only eight out of 36 were from the region has sent a clear and resounding message. The international banks are back and they are hungry for GCC deal flow. Of course, that there were a full 28 international banks willing to bid for $100 million tickets is a testament to the structuring of