Developers of UAE projects hit by borrowing squeeze - The National

Developers of large projects in the UAE face increasing borrowing costs, an HSBC chief has warned, as international banks cut back on spending and local lenders find themselves unable to compensate on the shortfall.

Jonathan Robinson, the head of project finance for the Middle East and North Africa (Mena) at HSBC, said a limited supply of funds was being outpaced by demand arising from increased infrastructure spending in the Gulf in particular. He said international banks, which have already scaled back their lending, remain reluctant to release funding because of the sovereign debt crisis and regulation that demands higher capital reserves.

Developers have turned to local banks, and local currencies, for financing, but the UAE is among the countries that do not have enough capital in banks to prevent a rise in borrowing costs, Mr Robinson said.

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