Saudi banks have arranged the most loan syndications this year so far, arranging for $4.19 billion of syndicated loans which represent 43 percent of the total in the Middle East and North Africa, data compiled by Bloomberg showed. The Kingdom's share of total regional syndications rose when figures of HSBC Holding's 40 percent-owned affiliate Saudi British Bank are included. HSBC is the region's top loan arranger this year at $1.82 billion of loans, including $1.4 billion in Saudi Arabia. This year, the Saudi banks played a great role in supporting the government's $514 billion spending plans and offset a decline in funding from Europe. Regional syndicated lending has fallen 28 percent this year to $9.86 billion, compared with drops of 39 percent in Western Europe and 47 percent in Asia. Saudi banks, which benefit from the lowest loan-to-deposit ratio in the six-nation Gulf Cooperation Council, accounted for four of the top-five lead arrangers this year, positions held by European and US banks in the five years to 2011. Loans to private businesses in the Kingdom grew 13.4 percent in the year to April, the fastest pace in three years, central bank data showed. Improved lending appetite in the Kingdom has driven the three-month Saudi interbank offered rate (Saibor), up 14 basis points or 0.14 percentage point this year to 0.915 percent yesterday, just below a three-year high. The spread of Saibor, the rate at which banks in the Kingdom lend to each other, over the equivalent London Interbank Offered Rate has more than doubled in 2012 to 45 basis points. The yield on six-month Saudi treasury bills declined one basis point to 0.44975 percent at a sale Monday, the lowest since March. Saudi Arabia sells treasury bills at weekly auctions on Mondays. The Kingdom's loan-to-deposit ratio is below 80 percent, compared with more than 100 percent in Qatar and Oman and 94 percent in the UAE, central bank data show. Raising funds via bond sales is gaining appeal among Saudi companies, which have the lowest average borrowing costs in the in the GCC. The average yield on Saudi debt was 2.48 percent on June 1, JPMorgan Chase & Co's CEMBI Broad Saudi Arabia Blended Yield shows. The yield is 3.99 percent in Qatar and 4.8 percent in the UAE, according to JPMorgan indexes. Saudi bond sales have already set an annual record of $7.8 billion, data compiled by Bloomberg showed. Banque Saudi Fransi, 31 percent-owned by Credit Agricole SA, last month sold $750 million of five-year Islamic bonds, partly to help it expand project-finance lending, Chief Financial Officer Philippe Touchard said. "Ultimately sukuk and bonds are much more liquid than loans," said Moody's Howladar. "A lot of lenders are still keen on maintaining high liquidity levels in the face of many global uncertainties and possible stresses." Bank loans still form a sizable component of company project financing. State-run Saudi Arabian Oil Co. and Dow Chemical Co will seek to raise $2.66 billion in bank loans as part of a $12.4bn financing for their Sadara Chemical Co joint venture to build a chemical complex, two bankers with knowledge of the situation said May 30. The Saudi economy is set to expand 4.8 percent this year, the second-fastest pace of growth in the GCC after Qatar, an April survey of 12 economists compiled by Bloomberg showed. That surpasses expected average growth of 1.4 percent for G10 nations.
