LONDON Oct 7 Oman is becoming a focus of the
Middle Eastern loan market as more Omani companies line up to
tap the international loan market, but the sudden upturn in
borrowing from the Sultanate is stretching banks exposure
limits, bankers said on Friday.
Oman's government and state-linked firms are turning to the
syndicated loan market as low oil prices weaken government
finances and make it harder for the state to fund projects from
"Activity at the moment in the Middle East is essentially
centred around Oman, with a little bit in the UAE," a banker
Oman Oil Company Exploration & Production (OOCEP) appointed
Sumitomo Mitsui Banking Corp as financial advisor this week on a
loan that is likely to exceed US$1bn, banking sources said.
Talks are still at an early stage and the upstream oil and
gas company, a subsidiary of state-owned Oman Oil Co, is
expected to raise the financing early next year, the sources
said. The deal is likely to have a secured pre-export financing
Parent Oman Oil Co (OOC) is also in talks with banks to
amend the terms of a US$1.85bn revolving credit facility dated
September 2014. The company is aiming to extend the maturity of
the loan, one tranche of which is due to mature in 2017.
OCC's existing 2014 loan consists of a US$1bn three-year
facility and a US$850m five-year facility which was signed by 16
banks. J.P. Morgan and the Bank of Tokyo-Mitsubishi co-ordinated
The company was originally planning to extend the three-year
2017 tranche into a five-year tranche maturing in 2019 but OCC
is now considering extending the maturity of the whole loan,
including the five-year tranche, a second banker said, adding
that the pricing will also be amended.
Another OOC-related deal was launched last month when MUFG
launched the US$700m Salalah liquefied petroleum gas (LPG)
project financing, which includes an equity bridge loan - the
sponsor is Oman Oil Company, according to Project Finance
Despite a shortage of Middle Eastern loans, mounting Omani
exposure is leading bankers to question if there is sufficient
bank appetite for the deals.
"If it is a well structured deal which pays well banks will
find a way to do this even if they have exposure. These deals
have always had a good following," a third banker said.
Two large recent Omani loans, a US$1bn sovereign loan which
closed at the end of the year and a US$4bn for Petroleum
Development Oman (PDO), another upstream oil business - have
already used up banks' Omani credit limits.
"Bank capacity is an issue. Not only have we had the PDO and
Oman sovereign deals but historically Oman has done a lot of
project finance type loans which banks still have long dated
exposure to - it will be difficult to juggle limits. Banks will
have to pick and choose carefully what they can do," the first
Last month the Omani government also raised a US$2.5bn bond,
its first in almost 20 years, as part of a plan to borrow up to
(Editing by Tessa Walsh)