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Testing tenders
16 December 2009
Despite the breadth and depth of financed projects within the Middle East, procurement processes still vary widely country to country. Paul Smith examines tendering successes, failures and procurer responses to a less benign lending environment.
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[GCC]
[tenders]
[epc]
When is an underwriting commitment not an underwriting commitment? In today's market – always. Since the emerging prominence of material adverse change (MAC) clauses from the third quarter of 2008, 100-plus page underwriting contracts have been sprinkled with clauses such as "subject to internal approval" or "subject to further technical due diligence" or "subject to a successful bookbuild".
The worst kept secret in the market is that there is no such thing as a firm underwriting commitment. Underwriting has always been contingent on other factors – it is just that most contingencies were invariably met until the crisis in the money markets.
Compared with 2007, MAC clauses are now more thoroughly drafted and the window in which banks are committed to an underwriting has shrunk to a maximum of six months.
The first big casualty of evaporated liquidity was the original long term financing of the Shuweihat 2 (S2) IWPP. Although the...
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