Middle Eastern borrowers are increasingly turning to Asia-Pacific’s syndicated loan market in a bid to broaden their funding base, as global bond issuance and domestic capital flows prove insufficient for their expansive economic transformation agendas.
In recent weeks alone, more than US$2 billion worth of deals have been brought to market by Gulf-based borrowers, specifically targeting Asian bank liquidity. Among these, Saudi Electricity Company secured a US$1 billion loan, Banque Saudi Fransi obtained US$750 million, and Al Ahli Bank of Kuwait raised US$500 million.
This strategic pivot comes amid growing fiscal pressures across the Gulf. Saudi Arabia, for example, continues to run a budget deficit, with crude oil prices sitting well below the US$92 per barrel threshold that the International Monetary Fund estimates is needed for the Kingdom to balance its books. The result is a sustained drive for capital to support Crown Prince Mohammed bin Salman’s Vision 2030 — a transformative programme valued at US$2 trillion.
Qatar, Kuwait, and the United Arab Emirates are similarly pushing ahead with long-term economic diversification plans. These require substantial investment, much of which is being sourced beyond their traditional markets, as governments and corporates seek more competitive funding terms and expanded lender bases.
“Middle Eastern borrowers, given the significant borrowing requirements, have been much more open to diversifying their lending relationships and willing to tap into the demand from Asia,” said Amit Lakhwani, global head of loan syndicate at Standard Chartered plc. He added that Asia offers unique advantages such as alternative currencies and maturities that may not be readily available in the regional loan market.
Loan activity from Middle Eastern issuers in Asia-Pacific reached a six-year high of US$5.2 billion in 2024, according to Bloomberg data. The recent surge follows Qatar National Bank’s US$2 billion loan in March, which attracted nearly 30 lenders, many of them from China, Japan, and Taiwan.
The appeal of such deals for Asian banks lies in both the scarcity of opportunities within their home markets and the comparative strength of Gulf-based borrowers. Year-to-date syndicated loan volumes in Asia-Pacific excluding Japan have dropped 30% to US$53 billion — the lowest in a decade — creating an incentive to pursue international deals that offer favourable risk-return profiles.
“Not only do Middle Eastern companies often benefit from superior credit ratings, but the loans also deliver higher margins relative to similarly rated Asian borrowers,” said Aaron Chow, managing director for loan capital markets, Asia-Pacific at Sumitomo Mitsui Banking Corp.
For instance, Saudi Electricity’s five-year loan, rated A+ by Fitch, priced at approximately 85 basis points over the secured overnight financing rate (SOFR). By comparison, Shinhan Card of South Korea, rated A, recently closed a near five-year facility at 80 basis points over SOFR.
Nonetheless, capacity constraints may limit future activity, as banks must navigate internal exposure limits related to geography and sector concentration.
