Nogaholding, the holding company for oil and gas assets owned by the government of Bahrain, is seeking a $350 million sharia-compliant loan in what would be a first for the group, banking sources aware of the matter said.

The firm joins a number of other oil and gas companies, including Saudi Aramco and Abu Dhabi National Energy Company, which have sought to raise money from banks in the past few months to help cushion their finances against the effects of lower oil prices.

Nogaholding is looking to arrange the Islamic five-year loan before the end of the year, with the proceeds to be used for general business purposes, two sources aware of the matter said on condition of anonymity as the information is not public.

Nogaholding, which holds stakes in companies including Bahrain Petroleum Company (Bapco) and Bahrain National Gas Company (Banagas), could not immediately be reached for comment.

The company was looking for an interest rate of around 250 basis points over the London interbank offered rate (Libor), but recent market moves could see this pushed up towards the 300 bps mark, according to one of the sources.

Bahrain's five-year credit default swaps, used to insure against a default, have jumped more than 20 per cent since October 21, a sign that investors are concerned about the country's budget situation.

Also last month, Standard & Poor's cut its credit rating on Saudi Arabia, which has strongly supported Bahrain since it experienced political unrest in 2011. Bahrain's five-year credit default swaps were at 334.9 points by 1135 GMT.

But Nogaholding will have no problem raising the money, the sources said, noting there would be support from local banks for one of the most high-profile Bahraini companies.

Nogaholding has not raised a loan before so its rarity value should attract banks, while its sharia-compliant structure will distinguish it from a number of other industrial borrowers currently in the loan market.-Reuters