Etisalat talking to banks over $2 billion loan

United Arab Emirates-based Etisalat is talking to banks about raising a $2 billion loan, sources aware of the matter told Reuters on Tuesday, as the telecommunications firm seeks funding amid a shift in Gulf loan markets.

It joins a flurry of regional companies seeking to secure funding before a likely rise in US interest rates pushes up borrowing rates, while the availability of loan finance is also being impacted by a liquidity squeeze within Gulf banks.

Etisalat is keen to close the loan, which will be structured as a revolving credit facility, in the first quarter of 2016, two of the sources said.

One of the sources, at an international bank, said the loan would be classified as a stand-by facility, meaning Etisalat could ask for lower pricing as further fees would be levied if the cash is utilised.

Nobody was immediately available to comment from Etisalat.

Companies in the UAE have enjoyed several years of cheap funding as banks built up huge capital cushions as a result of strong oil prices.

But the weakening in oil markets since last year has raised fears of a liquidity squeeze, compounded by expectations that governments in the region will follow an expected move by the US Federal Reserve by raising interest rates in coming months.