The Scramble for Finance
With $159 billion worth of contracts to be awarded across the Middle East in 2013, project owners and contractors are scrambling for project financing as the banking sector in the region adjusts new regulations, including the Basel III code, and cuts back on long-term lending activity.
With bigger contracts looming as Qatar enters the next critical phase of its preparations to host FIFA World Cup in 2022 and to bid for the Summer Olympics in 2020; project owners and contractors must explore other opportunities beyond traditional bank lending to ensure the realisation of the projects.
Before the financial crisis hit the world economy in 2008, government infrastructure projects in the GCC were financed mainly through syndicated loans led for foreign banks. At the height of the crisis, the availability of project finance dried up while at the same time propelling debt costs upwards.
Nowadays, with the Basel III accord and new banking regulations throughout the region, multi-currency loans came in vogue to permit local banks to lend in local currencies, with new and tighter caps introduced in recent years. In addition to major regional banks, the gap in project financing was filled by credit agencies and the bond markets.
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