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MIDEAST DEBT-Qatar loan launched into crowded marketplace wary on Oman -IFR

LONDON, Dec 6 (IFR) – The government of Qatar has launched a US$ 5.five billion loan into common syndication, becoming the latest Gulf borrower to hit the marketplace as countries, banks and corporates in the region seek to lock in money before the year-finish.

Qatar’s 5-year loan offers all-in pricing of 90 basis points more than Libor. The country had initially hoped to raise up to $ 10 billion with pricing of around 80 bps, but had to revise expectations against a backdrop of tightening liquidity and an upward trend in pricing in the region as the massive number of Middle East bargains began to saturate the market.

Bank of Tokyo-Mitsubishi UFJ, Mizuho, SMBC, Deutsche Bank, Barclays and Qatar National Bank are arranging the loan and as it now stands Qatar is anticipated to successfully conclude the deal by the end of December, bankers stated, with any industry uncertainty already factored into the smaller sized deal size.

The deal has been helped by the deep pockets and less expensive funding of Japanese banks, which make up half of the lead bank group.

“Banks have a huge appetite to hold this paper,” 1 banker stated. “Qatar is a premium credit: it has a single of the highest GDP per capita levels in the planet. Banks have huge country limits for Qatar.”

By contrast, the growing list of Gulf entities looking to borrow funds has made it far more hard for some to close loans before the year-finish, bankers say. Transactions locating it challenging going include the US$ 1 billion deal for Oman that is in the market.

“Oman is completely underwritten but it is not going so effectively in syndication – it is not getting great support.”

Oman is hunting for a five-year facility paying a margin of 110 bps more than Libor, which is getting coordinated by Citigroup, Natixis and Gulf International Bank. The deal is fully underwritten by the three leads and commitments from other banks are due in the subsequent handful of days.

Bankers say Oman is a really distinct prospect to Qatar. Oman’s deal was not helped by the reality that it was downgraded by Normal and Poor’s to BBB+ on Nov. 21, just after the providing was launched and, as a outcome, take-up so far has been sluggish.

“Oman is completely underwritten but it is not going so effectively in syndication – it is not receiving great assistance,” a second banker said. “There are as well several deals in the market place and pricing is also tight – banks are beginning to hold back.”

Nevertheless, with commitments not yet due, bankers close to the deal say there is still time. “It is too early to pass judgement. The situation may well modify,” mentioned a third banker.

BUSY Times

Joining Oman and Qatar are numerous Gulf-primarily based banks and corporates looking to raise loans this side of Christmas as low oil prices continue to bite into the region’s profitability.

Offers include a $ 800 million facility for Industrial Bank of Qatar, a $ 500 million deal for Doha Bank, a deal of up to $ 400 million for Gulf International Bank, a whopping $ six billion loan for petrochemicals organization Equate and a $ 5 billion loan for Emirates International Aluminium.

Whilst several of these transactions will get carried out, which includes those from CBQ and Equate, according to a number of bankers, there will also be losers in the line-up as banks have to make choices about which partnership will yield them most profit. Bankers stay uncertain about Doha Bank’s option of deal structure, even though other folks say that Gulf International Bank has left it also late to complete a transaction this year.

In the previous, Gulf banks may well have played a bigger function in arranging such loans, but they have grow to be significantly less capable to lend freely as low oil prices have lowered fresh flows of oil money into deposits.

Final month, Oman began advertising its $ 1 billion sovereign loan, while Bahrain raised $ 1.five billion in bonds.

Local lenders priced out of a lot of of these deals have now shut up shop to any new commitments till the 1st quarter of 2016 and have been told internally that their minimum pricing guidance has also elevated, the second banker mentioned.

This could also be reflected in international banks’ appetite, he mentioned: “It is obtaining near the finish of the year, liquidity is tight and the oil predicament is not obtaining any far better. International banks will query these offers as a lot as local banks.

“There will not be a large list of banks joining Qatar’s deal in general, and after it is carried out, banks will take a lesson from it and pricing will shift upwards.”