GCC firms 'face loans challenge'
London, September 23, 2008
GCC companies will find it difficult to secure syndicated loans until the current financial market turmoil subsides, loan market bankers said.
Sources said that international banks are not willing to underwrite deals in Dubai or in the wider GCC right now, and that lenders are being noticeably more selective about agreeing deals with borrowers in the GCC compared with their European peers, said a report in our sister publication, the Gulf Daily News.
'We have seen many banks pull commitments from deals they were due to sign,' an emerging market loan specialist said.
Borse Dubai has been in talks with banks over a syndicated loan that will refinance the company's $3.78 billion (BD1bn) loan agreed in March. Lenders now say it will be very difficult for the company to secure a loan in current market conditions.
The lack of liquidity and uncertainty about the future is prompting banks to talk about calling Material Adverse Change (MAC), a clause sometimes included in loan agreements that allows lenders to cancel deals and renegotiate terms, bankers said.
Dubai government agency DIFC Investments has been negotiating a $1.5bn syndicated loan and lined up six banks to arrange the facility last month. One banker said it remains to be seen if the loan will come to the market.
Other Dubai government-owned entities are in the process of syndicating loans. Investment Corporation of Dubai is out with a $6 billion loan, while Nakheel, developer of Dubai's palm-shaped islands, is in the market with a $1.2 billion facility.