JEDDAH: Middle Eastern companies borrowing improved by 43 percent as political unrest in the region wanes. Sabic Capital, Commercial Bank of Dubai, and Investment Corp. of Dubai leading the hefty increase. Middle Eastern borrowers are in the market with $5.5 billion of loans, which if completed would bring second-quarter volume to $11.5 billion, according to data compiled by Bloomberg. That compares with $8 billion raised in the first quarter. Companies are returning to the market after the so-called Arab Spring toppled autocratic leaders in Egypt and Tunisia. The cost of insuring Egyptian debt against default tumbled to the lowest since Tunisian ruler Zine El Abidine Ben Ali fled following weeks of protests against unemployment, corruption and dictatorship in January. President Hosni Mubarak of Egypt resigned less than a month later. "At the start of the year there was a lot of uncertainty about the Arab Spring and the popular uprisings in the Middle East," said Dirk Hentschel, head of distribution and loan syndication for Europe, the Middle East and Africa at WestLB AG in London. "That has improved a bit now and we're seeing an increasing pipeline of deals." Dubai's Investment Corp., the government's main holding company, is in talks with banks to refinance a $4 billion term loan with a new $2.8 billion facility. Even after the tensions have subsided, the interest on the deal of 350 basis points over the London interbank offered rate is higher than the average 215 basis-point margin for Dubai loans over the past year, according to Bloomberg data. Borrowing costs have been elevated ever since state-owned Dubai World was forced to restructure about $25 billion of debt in 2009. "Dubai has emerged as a safe-haven," said Raza Agha, Middle East and Africa economist at Royal Bank of Scotland Group Plc (RBS) in London. "You can see that many of the deals coming out involve them and Saudi Arabia, both of which are perceived to be relatively less vulnerable to the situation in Middle East and North Africa." A basis point is 0.01 percentage point. Libor is the rate banks charge to lend to each other.
