Export credit seen to boost ME lending

dubai — Middle East borrowers are increasingly using loans backed by export credit agencies (ECAs) to fund projects as tightening liquidity makes conventional borrowing more expensive and difficult to secure, according to Societe Generale.

France’s second-largest bank by market value is in talks with governments, state-owned and private companies for about twelve loans backed by ECAs for projects including in the energy and oil industries in the Middle East, Richad Soundardjee, regional chief executive officer, said in an interview in Dubai.

The lender more than doubled the number of ECA-backed loans it helped raise last year, compared with 2015, he said, without revealing the number of loans.

“ECA is one of the big ways that will really help the region meet the increased need for external funding,” Soundardjee said. “You can raise very large loans, you can achieve very competitive pricing, very often even cheaper than bonds and it is a fairly flexible tool.”

Middle East borrowers are seeking alternative sources of financing as costs climb. Low oil prices have slowed deposit growth at banks, limiting the amount of cash available for loans.

Societe Generale helped arrange a $227 million loan for Oman Shipping earlier this month, part of which was a 12year ECA facility. The bank is also the financial adviser to Egypt’s $5.9 billion Tahrir Petrochemicals project, which is expected to receive ECA-backed funding. It expanded its Middle East structured finance team in 2015 to tap regional demand for funding and advisory services for industrial, transport and energy projects. — Bloomberg