Aramco mega loan deals boost Islamic borrowing

Shariah-compliant borrowing has seen the biggest ever start since the beginning of the year

Aramco signed $10bn loans in March.
Aramco signed $10bn loans in March.

Loan deals worth $4bn from Saudi Aramco and its joint venture Rabigh Refining & Petrochemical have boosted borrowing of Shariah-compliant loans, data compiled by Bloomberg has found.

Since the beginning of this year, about $7.1bn of loans have been raised in Europe, the Middle East and Africa, compared with about $3bn for the same period in 2014.

The increase in borrowing is an evidence of strong investment from GCC oil producers despite the fall in oil prices since June last year, the report has said.

It added that Shariah-compliant loans have started to play an increasingly important role in the region's deals with assets of the global Islamic finance industry expected to almost double by 2018.

Several Gulf producers are in line for loans, including Kufpec which is set to increase borrowing from $1bn to $2.5bn and ENOC seeking a $1.5bn credit, sources told Bloomberg.

In March, Saudi Aramco signed a deal for $10bn credit facilities over a five-year period, $3bn of which were in the form of Shariah compliant loans.

Banks involved in the deal told Reuters that Aramco could use the loan to buy a stake in Germany's chemical company Lanxess, with a market value of $4.7bn. For the deal, Aramco is competing with Russia's NKNK, Reuters reported in February.

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