Qatar Energy taps $300mn Islamic loan

Qatar Energy City, a $2.6 billion economic zone being developed by Bahraini investment bank Gulf Finance House, has launched syndication of an Islamic loan to help finance the project's construction, sources said.

The $300 million musharaka carries a margin of 2.5% and matures on October 31, 2010, two bankers invited to join in the syndication said.

In a musharaka, a bank provides funding to entrepreneurs, who also contribute capital. Profits from the venture are shared.

Emirates Islamic Bank and Standard Bank are bookrunners. Khaleeji Commercial Bank and Standard Bank are underwriters, one of the bankers who declined to be identified said.

Banks have been invited to participate in UAE dirhams and dollars, two bankers said.

"Some of the UAE banks don't really want to take dollar positions," a banker with direct knowledge of the transaction said. "They want to keep everything in dirhams ... If they're lending in dirhams they have no forex risk," he said, without giving details of the transaction.

A spokesperson at Energy City said the transaction had been closed.