Once a relatively sleepy backwater of longer-term project and small-scale FI financings, the loan markets of the Middle East are now global and booming. But as hydrocarbon-fuelled corporates and sovereigns seek to diversify and pick up assets around the world using leverage, the global credit market is facing its severest liquidity test since the early 1990s. Some say the malaise is even more profound than during the last oil shock. Despite the very real difficulty in some parts of the loan mark

Raouf Jundi: There are two things. One argument is that the Russian FI market has remained open, so why is the Middle Eastern not there? Credit quality, in fact, in the Middle East is much better. But many of the banks had already been to market, so maybe the demand wasn't really there and as long as prices have gone up, the borrowers weren't willing to pay up. Now we are seeing a few banks going back into the market. There have been some club deals, there is now the first, test for Bank Muscat

Peter Bulbrook: To a degree, but not entirely and there is not an exact measure between loan and capital market pricing anyway. Raouf Jundi: It doesn't just apply to the Middle East and even Europe, where the banks - or the markets - have been saying that they will converge. They have never really converged. At one time either one is high or the other is high depending on where the liquidity is coming from. Rizwan Shaikh: Convergence will depend on size. If you can get deals done within your rel

Raouf Jundi, Bank of Tokyo-Mitsubishi: Driven by the growth of regional economies, the loan market in the Middle East is booming. There is strong liquidity but obviously at a different price, and coming perhaps from different areas. Europeans are still providing the bulk of the liquidity and the regional banks are happy to come in only if there is a local tranche. Occasionally local banks will lend in dollars, but clearly the cost of dollar funds for them is too high, but for local currency - di

Peter Bulbrook: To a degree, but not entirely and there is not an exact measure between loan and capital market pricing anyway. Raouf Jundi: It doesn't just apply to the Middle East and even Europe, where the banks - or the markets - have been saying that they will converge. They have never really converged. At one time either one is high or the other is high depending on where the liquidity is coming from. Rizwan Shaikh: Convergence will depend on size. If you can get deals done within your rel

Peter Bulbrook - Barclays Capital Peter Bulbrook is a Managing Director in Global Loans at Barclays Capital and is Head of European and Middle East Loan Origination. He joined Barclays Capital in 2000 from HSBC where he was a senior member of the Loan Distribution team.  Before that, Peter spent five years at the Industrial Bank of Japan where he held various roles in Structured Finance including Leveraged and Project Finance Loan Syndication. Gilles Franck - Standard Chartered Bank Gilles Franc

Raouf Jundi: There are two things. One argument is that the Russian FI market has remained open, so why is the Middle Eastern not there? Credit quality, in fact, in the Middle East is much better. But many of the banks had already been to market, so maybe the demand wasn't really there and as long as prices have gone up, the borrowers weren't willing to pay up. Now we are seeing a few banks going back into the market. There have been some club deals, there is now the first, test for Bank Muscat

Raouf Jundi, Bank of Tokyo-Mitsubishi: Driven by the growth of regional economies, the loan market in the Middle East is booming. There is strong liquidity but obviously at a different price, and coming perhaps from different areas. Europeans are still providing the bulk of the liquidity and the regional banks are happy to come in only if there is a local tranche. Occasionally local banks will lend in dollars, but clearly the cost of dollar funds for them is too high, but for local currency - di

Despite the very real difficulty in some parts of the loan market, the first IFR Middle East Roundtable's panel were unanimous in the belief that, for the right name, there is still plenty of liquidity on offer. With a couple of notable exceptions, Middle East banks look to have escaped relatively unscathed from the subprime crisis. However, given the market's reliance on international banks, increased bank funding costs mean liquidity now carries a higher price Borrower flexibility is also key.