Qatar's Barwa Real Estate Co. confirmed on Monday it had reduced the size of an Islamic loan by $100 million to $700 million after it was undersubscribed due to the global credit crunch.
Barwa had planned to raise $800 million in a one-year revolving Islamic loan to finance expansion and current projects, it said in a statement on the Doha bourse Web site.
"Lenders' appetite for the deal was hit because of the increased cost of funding prompted by the credit crunch," Barwa said.
Banking sources told Reuters last week support for the deal was hit partly because as a non-sovereign, regional property company, the borrower has a limited number of relationship banks to call upon.
Islam bans lending on interest and in a murabaha deal a lender buys a commodity and sells it to the consumer at a higher price, locking in profit.
Government-owned Qatari Diar Real Estate and Investment Co. owns 45 per cent of Barwa. (Reuters)