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Brakes on GCC mega-projects from non-bank lenders
27 February 2013
Several of the large project finance deals in the Middle East region have been held up in recent months, with bond issues and ECA debt approvals producing recurring delays. By Jon Whiteaker.
Liquidity constraints in the global banking market have not slowed the infrastructure ambitions of GCC countries such as Saudi Arabia and the United Arab Emirates. Each of them is nearing financial close on truly huge project financings, but the new realities of reduced commercial lending have slowed their progress. Although developers are increasingly able to attract large chunks of debt from export credit agencies (ECAs), they are finding business beyond banks often slow and frustrating.
Sadara’s commercial bank rump
Saudi Aramco and Dow Chemical Company’s Sadara project, with estimated costs of $20 billion, will be the largest single-phase petrochemicals facility in the world. Once complete it is expected to produce an estimated $10 billion in revenue per year, with operations due to start in 2015. A large group of local and international banks is expected to put up a total of around $1.5 billion towards the project’s debt requirement, but ECA commitments...
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