Morgan Named to Lead $5 Billion Kuwait Loan

Qatar Chooses Citicorp as Adviser

LONDON -- J.P. Morgan & Co. announced Thursday that is would be the lead manager of a long-expected $5 billion syndicated loan to rebuild Kuwait.

Separately, Qatar appointed Citicorp as financial adviser for a project to develop the offshore natural gas reserves of the Persian Gulf emirate, the American Banker has learned.

Citicorp will assess ways to raise funds for the project, also expected to cost about $5 billion.

Previous Morgan Deal

The Kuwaiti credit follows a similar $4.5 billion international funding this summer by Saudi Arabia, also coordinated by Morgan, to help meet the kingdom's Gulf War costs.

The five-year loan will be syndicated among banks worldwide toward the end of this month.

The National Bank of Kuwait will act as special adviser on the loan to the Kuwait government.

A spokesman for Morgan declined to comment on pricing, but bankers said loans would be set at half a percentage point over the London interbank offered rate (Libor).

Terms Called Tough

Bankers described those terms as aggressive, especially because the loan is unsecured and thus does not allow lending banks to have a lien on any of Kuwait's estimated $50 billion in stock, bonds, and real estate investments.

"At that spread, no one is bitting your hand to get the business," one banker told Reuters.

Still, bankers suggested that Kuwait would have little difficulty in completing its funding, perhaps the largest loan for a sovereign nation ever seen on the syndicated loan markets.

"A participation in this loan means that you will earn kudos with Kuwait when it comes to handling their future banking and investment business," one British banker said. "Banks will go into it for relationship reasons."

The Saudi funding last summer had an even thinner spread, 37.5 basis points over Libor.

In Qatar, Citicorp's role will be to assess ways to raise funding for a project designed to produce liquefied natural gas for export to Japan.

A spokesman confirmed Citicorp was awarded the contract, but declined to give details of the project, pending official notification by Qatar.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.