Abu Dhabi: Emirates Steel said Wednesday it raised $1.1 billion (Dh4 billion) in project finance, an indicator that regional banks are easing credit to select government-related entities.
The firm said it signed a seven-year project financing agreement with a consortium of seven conventional banks and two Islamic finance institutions.
"The project finance debt was raised through a $367 million Islamic facility and a $733 million conventional facility, each of seven-year tenure," Emirates Steel said in a statement.
The conventional banks consortium consists of the National Bank of Abu Dhabi, Union National Bank, First Gulf Bank, Bank of Baroda, Arab Banking Corporation, Al Khaliji France and Al Khaliji Commercial Bank. The two Islamic finance institutions are the Abu Dhabi Islamic Bank and Al Hilal Bank.
Natixis acted as financial advisor and Denton Wilde Sapte as legal counsel.
"Lending [by banks] to government-funded projects, mainly in Abu Dhabi, has been growing. Overall, however, the loan growth remains soft in the UAE," Janany Vamadeva, banking analyst with HC Brokerage in Dubai told Gulf News by telephone.
"I don't expect loan growth to pick up until next year due to asset quality issues, funding constraints and the general macro-economic environment," she added.
Another banking sector analyst, who didn't want to be named, said UAE banks have enough money to lend but are currently lending mainly to entities solidly backed by the government.
Emirates Steel is a subsidiary of the Abu Dhabi Basic Industries Corporation (ADBIC), which is wholly-owned by General Holding Corporation (GHC), an Abu Dhabi government-owned company.
Al Jaber Energy Services said on Tuesday it has tied up $300 million (Dh1.1 billion) in financing facilities from Abu Dhabi Islamic Bank to build large segments of the Shah Gas project.
The project was awarded to Al Jaber by Abu Dhabi Gas Development Company, a subsidiary of Abu Dhabi National Oil Company (Adnoc) and is part of the $12 billion Shah sour gas field development.
Emirates Steel currently has an output capacity of 2 million metric tonnes per annum, which is expected to reach 3 million metric tonnes in 2011 through a Dh9 billion expansion plan.
General Holding Corporation (GHC), the parent company of Emirates Steel in September last year signed a Dh1.74 billion contract with Danieli Corporation for the construction of phase II B of Emirates Steel's Dh9 billion expansion, a move that would help bring the Abu Dhabi-based company closer to becoming the region's largest steel manufacturer.
- $367 million credit raised through Islamic facility
- $733million raised via conventional facility
- Dh1.1 billion Al Jaber will use for the Shah gas project