JPMorgan recently tried to sell the loans it holds from the sovereign funds of the two major oil producers in the Gulf, Saudi Arabia and the United Arab Emirates, at a discount, Reuters reported on Thursday, citing sources and a document that ‘he saw.
The decision announced by JPMorgan this week comes as banks prepare for a new round of loan requests from oil-producing countries in the Persian Gulf amid oil price crashes, crumbling oil demand, and the coronavirus pandemic. tighten their budgets and force them to use more borrowing to fill shortages.
According to the loan document that Reuters saw, JPMorgan marketed this week loans it had made to the Public Investment Fund (PIF), the sovereign fund of Saudi Arabia, and to Mubadala Investment Company, the sovereign fund of Abu Dhabi. The bank offered to sell the loans at 98.75 cents on the dollar for at least US $ 50 million from a PIF loan and 99 cents on the dollar for loans to Mubadala, reports Reuters.
Besides JPMorgan, other international banks providing loans to oil-producing countries in the Gulf have also attempted to reduce their exposure to wealth funds in the Middle East, a source based in the Persian Gulf told Reuters.
“In general, it is expected this year that there will be a lot of demand for the region … so make room before that,” the source told Reuters.
Middle East oil producers have already started tapping into debt markets amid growing budgetary pressures on their economies and wealth in the crash of oil prices and the coronavirus pandemic.
Qatar sold US $ 10 billion of three-tranche bonds this week, which received four times more offers, a sign that investors have taken advantage of the “juicy returns” offered by Qatar. Qatar’s bond issue – the first in the Gulf region since the collapse of oil prices and the pandemic of oil economies and demand – is seen as a test of investor interest in bonds Middle Eastern oil producers amid the collapse in oil prices.
By Tsvetana Paraskova for Oilprice.com
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