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GCC project finance may hit $30 billion

MANAMA: The regional project finance industry has reached a crossroads and looks set for growth, according to BNP Paribas regional head of structured finance Christophe Mariot.

Speaking at the MEED Middle East Project Finance Conference 2010 at the Ritz-Carlton Bahrain Hotel and Spa yesterday, he predicted that project finance business across the GCC could be worth between $20 billion and $30bn this year.

"There are a lot of projects in the pipeline and a lot of projects going ahead so this is a healthy time for project finance," he said.

"We should be ahead of the levels of last year and from the attendance at this conference you can see that the banks and financiers are in place to fund projects.

"I think we have reached a crossroads, though it is still a mixed market. We are not back to the levels we were seeing before the downturn but we are still seeing progress from last year.

"From 2002 to mid-2008, the project finance market showed constant growth with record volumes resulting from increasing demand in power, infrastructure and oil and gas," he said.

"Market conditions since summer 2008 have resulted in a significant backlog of transactions as the need for infrastructure continues to be strong despite the global economic recession," he added.

He said there were now a very large number of projects reaching financial close which have successfully used diversified funding sources.

"The project finance pipeline continues to be very strong, with several multi-billion transactions due to come to market," he added.

"With limited capital to lend, banks will have to carefully arbitrate between projects.

"At the same time, governments across Europe, the Middle East and Africa region are pushing ahead with major infrastructure projects in an effort to stimulate the economy. Governments have made clear that they will support strategic national infrastructure project," he added.



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