Gulf syndicated loan market severely disrupted: Bankers
Reuters – 02 October, 2008www.arabianbusiness.com
Syndicated lending to the Gulf is now severely disrupted and several large
loans have been postponed, reworked, repaid or drawn down to cope with
extraordinary market conditions, senior banking sources said.
Gulf-based banks have battled increased funding costs for most of the year
and have relied heavily on European and Asian banks to buy loans for
regional borrowers. But bank funding costs have spiralled after Lehman’s
collapse and liquidity is reatreating back to domestic markets and is being
further eroded by enforced bank consolidation.
“There is no money in the Middle East loan market – there is no liquidity,”
a loan syndicator in the Gulf said. Several loans have already been affected
by deteriorating market conditions and international banks are now unwilling
to underwrite deals in the six oil-producing Gulf Cooperation Council (GCC)
states, bankers said.
Bankers expect volume to plummet in the fourth quarter. The Middle East has
borrowed $ 91bn by the end of the third quarter, which is 16.5 percent down
on last year’s $ 109bn figure for the same period, according to Reuters Loan
Pricing Corp data.
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