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Mideast loans surge 92 per cent to $12.4b

DUBAI - Syndicated loan activity in the Middle East saw a substantial drop in the second-quarter with volumes slumping to $3.3 billion, compared to $9 billion in the first quarter, data from Thomson Reuters showed.

But despite the second-quarter slump, loan activity during the first-half showed a year on year increase of 92 per cent at $12.4 billion signalling the onset of a recovery driven by the financials and telecommunications industries in 2010, suggests an analysis of the Thomson Reuters Middle East Investment Banking data for the first half of 2010.

The two sectors accounted for 54.6 per cent and 36 per cent respectively of the loan activity in the market during the first sixth months of 2010.

The largest Middle Eastern loan for the second quarter 2010 was the $ 2 billion book run by BNP Paribas, DBS Bank, Qatar National Bank, Societe Generale, and RBS for Qatari telecoms outfit QTel. WestLB ($2.2 billion), HSBC ($1.2 billion) and Mitsubishi UFJ Financial ($959 million) were the top three institutions active in loan during the period 
under review.

Middle East debt issuance in the first half of the year stood at $10.9 billion, down 32 per cent over the year-ago period. HSBC snagged the top spot in the Middle Eastern Debt Capital Markets fee rankings. Worldwide, debt capital markets activity fell 23 per cent to $2.6 trillion compared to the first half of last year.

Equity issuances in the region witnessed a boost in the first half of the year, gaining 64 per cent over the year-ago period to $5.6 billion while globally, equity activity totalled $314.5 billion, marking a seven per cent decrease from the first half of 2009. The financial sector was the main driver, contributing 57 percent of activity with the Central Bank of Libya dominating the fee tables, the data showed.

Investment banking and adviser fees in the region reached $247 million during second quarter contributing to $429 million for the second half 2010 – up 19 per cent year on year.

“Although the second quarter was modest in comparison to a highly impressive first quarter, the two have combined to build a solid start to 2010. The levels of fees, Mergers and acquisitions (M&A), capital market and loan activity are fuelling a growing confidence among the Middle East investment banking community,” said Managing Director of Thomson Reuters Middle East & Africa, Basil Moftah.

M&A activity in the Middle East fell sharply in the second quarter, underlining the difficult environment investment banks face in the region. However, globally, the value of M&A surged nine per cent to reach $1.1 trillion during the first half of 2010.In the Middle East, M&A volumes slumped 70 percent in the second-quarter compared to the previous quarter, but investment banking and adviser fees for the first half of the year rose 19 percent to $429 million, Thomson Reuter’s figures show. Real estate represents the most targeted industry in the Middle East with $4.4 billion, or 37.7per cent of the region’s M&A activity. The top Middle Eastern targeted deal for the first half was the government of Abu Dhabi’s acquisition of Yas Island Properties of Aldar Properties for $2.4billion.

A new report from M&A database Zephyr also suggests that the value of M&A activity targeting the Middle East fell by 38 per cent in the first despite an 86 percent increase in volume, highlighting the extent to which value has been stripped from deals in the region.Credit Suisse dominated the M&A fee league tables for the first half ahead of Morgan Stanley and JPMorgan. The Swiss investment bank advised Qatar’s fund in its 1.5 billion pound acquisition of London department store Harrods.


—issacjohn@khaleejtimes.com