A funding squeeze has hit private-sector companies so far this year, as total syndicated bank loans to companies in the Middle East fell to the lowest level since 2004.
Borrowers in Gulf countries have raised US$2.9 billion (Dh10.65bn) of syndicated loans so far this year, an eight-year low, according to Bloomberg data.
The total for the year to date compares with $3.89bn raised during the same period last year.
Middle Eastern companies should prepare for a tough year, with bank lending constrained worldwide, said Bashar Al Natoor, the director of corporate finance for Europe, the Middle East and Africa at Fitch Ratings.
"Banks have tightened their liquidity and the way they look to corporates and their exposures," Mr Al Natoor said. "But high-quality corporate credits still have access to bank financing."
The data shows syndicated loans in the Middle East have been fewer in number and smaller in size for the private sector than loans raised by Dubai's Government and companies in the Gulf with strong links to governments.
Only a handful of private-sector companies, including Oman's Nawras, have raised funds through syndicated loans.
Other companies that have received syndicated bank loans include the International Petroleum Investment Company, the Abu Dhabi investment fund that signed a deal this week to refinance an $850 million loan, and the Arab Petroleum Investments Corporation.
By contrast, companies in Egypt and other parts of the Middle East have not raised any funding via syndicated loans.
HSBC Middle East was the leader in arranging syndicated loans in the region, with deals worth $391.6m.
Factors including the euro-zone debt crisis and simmering political unrest in parts of the region are hampering the amount of funding that can be raised, Mr Al Natoor added.
"The liquidity and financing situation will continue to be challenging during 2012, until there's more clarity on many aspects," he said.
"There's pressure on Europe, political instability in the region and many factors which will continue to put the pressure on."
Threatened by the looming shadow of a Greek default, banks have raced to cover a shortfall of billions of euros with distressed-asset sales and capital raises.
Last month, the European Banking Authority said banks on the continent, excluding Greek lenders, would face a €78bn (Dh378.37bn) capital shortfall.
In the meantime, many Middle Eastern companies are going to capital markets directly rather than seeking bank lending in an effort to secure lower borrowing costs. Bond underwriting in the Middle East has totalled $9.3bn so far this year, surpassing highs during the same period throughout the past decade.
The flood of new bond sales in the region comes after a dearth of new issuances last year, as the Arab Spring deterred many companies from trying to tap international markets.
Islamic bond sales have also soared, with six sukuk issuances by GCC countries raising $5.9bn in the year so far - putting the Islamic bond market on track for its strongest year on record in the Gulf.
Last month, the ratings agency Standard & Poor's warned that funding of projects through syndicated loans would almost certainly fall as Europe's debt crisis sapped banks' capacity to lend. The decline in bank lending comes as signals of business confidence wane in the UAE.The HSBC Purchasing Managers' Index for the UAE slipped to 52 last month from 52.4 a month earlier. A reading above 50 indicates expansion, while a figure below 50 signals contraction.
"With problems still lingering in the banking sector, credit conditions are likely to remain tight," analysts from Capital Economics wrote in a research report.
In recent months, the UAE's reading has lagged behind its average of 53.9 during the course of last year, leading analysts to speculate that the Emirates will experience a slowing rate of economic growth this year.
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