JPMorgan To Dump Loans Of Gulf Oil

Producers

JPMorgan has recently tried to sell at a discount loans it holds of the sovereign wealth funds of the
two major oil producers in the Gulf, Saudi Arabia and the UAE, Reuters reported on Thursday,
citing sources and a document it has seen.

JPMorgan’s reported move this week comes as banks are readying for another round of loan
requests from the oil-producing countries in the Persian Gulf as the oil price crash, the crumbling
oil demand, and the coronavirus pandemic are squeezing their budgets and making them resort to
more borrowing to fill in the shortages.

According to the loan document Reuters has seen, JPMorgan quietly marketed this week loans it
had extended to the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, and to
Mubadala Investment Company, the sovereign wealth fund of Abu Dhabi. The bank offered the
loans for sale at 98.75 cents on the dollar for at least US$50 million of a PIF loan, and at 99 cents
on the dollar for loans to Mubadala, Reuters reports.

Apart from JPMorgan, other international banks with loans to oil producing countries in the Gulf
have also tried to sell down their exposure to the wealth funds in the Middle East, a source based
in the Persian Gulf told Reuters.

“Generally the expectation this year is there will be a lot of asks for the region ... so you make
room ahead of that,” the source told Reuters.

Middle East oil producers have already started to tap the debt markets amid growing fiscal
pressures on their economies and wealth funds in the oil price crash and the coronavirus
pandemic.

Qatar sold this week US$10 billion in three-tranche bonds, which received four times as many
offers—a sign that investors lapped up the ‘juicy yields’ that Qatar offered. Qatar’s bond issue—
the first in the Gulf region since oil prices crashed and the pandemic battered economies and oil
demand—is viewed as a test for investor interest in bonds from Middle East’s oil producers amid
collapsing oil prices.

By Tsvetana Paraskova for Oilprice.com