The government of Qatar has invited banks to provide it with a $5.5 billion loan, sources aware of the matter said on Tuesday, as Doha became the latest Gulf government to seek funds with its finances pressured by low energy prices.
The five-year loan is smaller than the amount of up to $10 billion which bankers said last month that the government aimed to borrow. The finance ministry did not respond to a telephone call from Reuters seeking comment.
Qatar, the world's top liquefied natural gas exporter, is one of the richest countries in the Gulf but it has still projected a budget deficit next year after gas prices fell.
The loan is important to Qatari financial markets because it will, temporarily at least, reduce the amount of domestic borrowing which the government has to conduct, and thus relieve upward pressure on local money market rates.
The Qatari riyal fell sharply in the forward foreign exchange market last week as traders worried that Doha might have trouble agreeing with banks on the terms of the loan.
Marketing of the loan deal will close in the third week of December, sources said. One said the interest rate on the loan would be between 85 and 95 basis points over the London interbank offered rate (Libor).
The transaction is being arranged by Bank of Tokyo-Mitsubishi UFJ, Mizuho, Sumitomo Mitsui Banking Corp, Deutsche Bank, Barclays and Qatar National Bank, two of the sources said, speaking on condition of anonymity as the information isn't public.
In the past, Gulf banks might have played a bigger role in arranging such a loan, but they have become less able to lend freely this year as low oil prices have reduced fresh flows of oil money into their deposits.
Last month, Oman started marketing a $1 billion sovereign loan, while Bahrain raised $1.5 billion in bonds.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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