Intercreditor agreements in GCC financing transactions
Where lenders actually fight in Dubai, Riyadh and Doha deals.
Multi-creditor structures are now common in Gulf project, acquisition and real-estate finance. The intercreditor agreement is where the economics of a deal are either protected or given away. This note flags the battlegrounds we see most often when acting for banks, funds and sponsors.
Payment waterfalls and enforcement standstill
Senior lenders will insist on a tightly drafted waterfall and a meaningful standstill before junior or mezzanine creditors can accelerate or enforce. In DIFC and ADGM governed documents, English-style security agent mechanics travel well. Onshore UAE and Saudi security can be less forgiving: registration, notarial form and local enforcement paths must be mapped before the waterfall is treated as gospel.
Islamic tranches beside conventional debt
Many GCC facilities combine a conventional term loan with a murabaha or ijara tranche. The intercreditor must say, without embarrassment, how profit, commodity risk and purchase-undertaking payments rank against interest, and who instructs the security agent when Sharia and conventional creditors disagree.
Hedge counterparties and working-capital banks
Hedge counterparties often demand super-senior treatment on close-out amounts. Working-capital banks want freedom to set off. Sponsors want leakage for permitted payments. None of this is unusual; leaving it to “market” language is how disputes start two years later.
What we tell clients
Negotiate the intercreditor while term sheets are still warm. Once funds are committed, leverage evaporates. Hassan Mohammed Law Firm’s finance desk drafts and negotiates these documents for lenders and borrowers across the GCC. This article is general information, not legal advice.