Bank of America Merrill Lynch, Barclays, Deutsche Bank, MUFG, SMBC, Mizuho Bank, United Overseas Bank, Banca Intesa Sanpaolo and Standard Chartered are underwriting the new US$3bn loan, the bankers said.

HSBC and JP Morgan are not underwriters but have lead roles on the deal, two of the bankers said, and the loan is expected to be syndicated to more banks.

The refinancing is expected to pay 25bp-35bp more than the original US$3bn loan, which was agreed in March 2015, the bankers said.

The existing deal paid 81.7bp over Libor all-in, according Thomson Reuters LPC data.

“The deal is going very well,” one of the bankers said.

Qatar National Bank did not respond to a request for comment.

BIG TEST

The refinancing is the first significant syndicated loan for a Qatari borrower since Saudi Arabia, the UAE, Bahrain and Egypt imposed travel restrictions on Qatar in June and accused Qatar of backing terrorism -- a charge Doha denies -- and is a major test for lenders' appetite for Qatar risk, the bankers said.

A number of the lead banks have been sounding out the loan market for appetite over the last couple of months, as it was uncertain what effect the travel bans and the resulting heightened political tensions between Qatar and its neighbours would have.

Local banks have already fallen foul of the situation, with UAE banks now unable to lend to Qatari borrowers, but it was unclear whether international banks were also under pressure to take sides in the dispute.

“There was a long period of market sounding to find out what bank appetite was. It was obviously thought there was enough appetite in the market as a result of that sounding,” a second banker said.

Barclays and Deutsche Bank are part owned by Qatari International Authority, the sovereign wealth fund, so their involvement in the deal was expected – but the presence of US banks in lead roles is seen as significant.

“Banks don't want to say no to deals because of the political situation. Part of stopping that dynamic is strength in numbers as it gives them comfort, rather than being the lone wolf standing up and saying yes or no,” a third banker said.

Last week Yousef al-Jaida, chief executive of the Qatar Financial Centre, said that the government will comfortably be able to raise US$9bn through an international bond issuance next year, so a lucrative bond mandate is also acting as a catalyst for banks to participate on the loan.

“It (taking part in the loan) also helps banks to get a place on the bond,” the third banker said.

The original 2015 loan signed with Barclays and HSBC acting as coordinators, and MUFG, Deutsche Bank, Mizuho Bank, Standard Chartered Bank and SMBC acting as initial mandated lead arrangers and bookrunners. It was QNB's biggest syndicated loan to date.

(Additional reporting by Tom Arnold in Dubai; Editing by Christopher Mangham)

By Sandrine Bradley and Davide Barbuscia