Gulf demand for syndicated loans slow: Standard Chartered

Borrowers from the Arabian Gulf aren’t tapping the syndicated loan market, preferring to rely on financing from individual banks, according to Standard Chartered Plc.

“I don’t see lots of companies coming to the market for new money,” Steve Perry, a Dubai-based managing director at Standard Chartered, said during a conference in the emirate’s today. “The borrowers that are able to raise new money are looking at bilaterals.”

Demand for loans has slowed amid the political turmoil in North Africa and the Middle East that drove borrowings costs higher. Syndicated loans declined 71 per cent to $5.36 billion this year for the Middle East and North Africa from the same period in 2010, according to data compiled by Bloomberg.

Companies and governments from the six-nation Gulf Cooperation Council will need to refinance about $20bn of existing debt this year, said Adil Kurt-Elli, a director at the CEEMEA Debt Capital Markets division at HSBC Bank Middle East Ltd. The amount can “easily be absorbed” by lenders, according to Elena Ivanova, head of new market loans at Goldman Sachs Group Inc.

“The market is there for $20bn of refinancing for this region,” HSBC’s Kurt-Elli said during the conference. “You have the capacity to get that financing done.”

Standard Chartered was the fourth-biggest mandated arranger of loans in the Middle East and North Africa among 44 banks this year, Bloomberg data show.