Until recently export credit agency work in the Gulf has traditionally been associated with tranches in large project finance deals, the occasional aircraft financing, and the telecoms sector. With the onset of the liquidity squeeze and the drying up of the syndicated loan market, export credit has become a lot more attractive as a finance option. For export finance banks, out of any projects in the current environment, utility projects are one of the most attractive as demand for electricity and water continues unabated. The recent landmark deal arranged for Dubai Electricity and Water Authority (Dewa) demonstrates how export credit can be used to finance a series of existing and new contracts to import vital equipment that cannot be financed by either cashflow or other resources.

The $1 billion Dewa deal is landmark for a number of reasons. It is the first export credit financing for a sovereign company in...