DUBAI- Overall loan activity in the Gulf is about 20% to 25% lower than a year ago, but deals by government-related entities have surged in 2020 on the back of acquisitions and infrastructure projects, Abu Dhabi Islamic Bank's head of corporate finance and investment banking said on Thursday.

The subdued loan market contrasts with international bond issues from the region, which are on track for a record year. Governments have made up the bulk of this year's issuance, with the value of their bond sales already surpassing last year's total.

Amir Riad, ADIB global head of corporate finance and investment bank, said Gulf government-related entity (GRE) deals are up by about 40%, with ADIB's loan activity around 20% higher.

"Based on the statistics we see, the overall market is down 20-25% if you look at it on an overall basis year to date ... Effectively what we have seen is a major uptick in GRE activity," Riad said.

"These are event-driven transactions, for example acquisition-driven," he said, adding, "infrastructure financing is an important consideration here in the market."

Deals included DP World raising $9 billion as part of its delisting and Tabreed raising $692 million to fund its acquisition of Emaar Properties' EMAR.DU Downtown Dubai district cooling business.

In the wake of the economic downturn resulting from the coronavirus crisis coinciding with weak oil prices, private sector companies have reprioritised their capital expenditure and reviewed their plans, adding they would only look at the debt markets when there is an important need to do so.

He also said stimulus measures taken by governments in the Gulf have also helped corporates avoid raising debt, but as payment holiday ends, they will return to tapping the market.

"We will see further activity in the corporate space coming back to the market over the next few months as the economy improves and as the health situation, obviously, gets under control," he said.

(Reporting by Yousef Saba; Editing by Toby Chopra) ((Yousef.Saba@thomsonreuters.com; +971562166204))