Most investors and readers are aware of the subprime mortgage-driven credit market slump. Lending to potential customers has declined substantially, from typical homebuyers to large corporations.

To be sure, the credit markets are not frozen, as they appeared to be during the August 2007 credit crunch and accompanying equity market sell-off, but lending requirements are much more rigorous today, following large subprime investment losses.

Speculative deals -- be it a large debt offering backed by mortgages, or a mortgage for a condominium project -- are not being approved. Two years or so ago, flush with cash and eager to take advantage of the yield spread, these type of deals undoubtedly would have received multiple funding offers from banks, mortgage companies, and other investment firms.



Still, there's one investment source that's flush with cash, and assertively seeking to deploy that capital, both at home and abroad: petrodollars, particularly from Persian Gulf countries.

OPEC, whose members include nations outside the Persian Gulf, is expected to receive $658 billion in revenue in 2007, up 8.7% from $605 billion in 2006, according to data from the U.S. Government's Energy Information Administration. In 2008, the EIA expects OPEC revenue to rise to $762 billion. Further, Persian Gulf states are putting that money to work.

Searching for bargains

The United Arab Emirates, through its sovereign investment vehicle Mubadala Development Company, which has an interest in a Las Vegas development via the Carlyle Group, has also invested $622 million in the U.S. semiconductor sector, The Wall Street Journal reported. (Subscription required.)

Also, the Dubai Government's DIFC Investments is looking to buy property, telecom, and energy assets in the United States, after the subprime mortgage crisis drove down asset prices, Reuters reported. Earlier this year, DIFC invested in Deutsche Bank (NYSE: DB).

Asked during a panel discussion whether the mortgage crisis had created opportunities for investments, DIFC Governor Omar bin Sulaiman said, "Yes. We are looking at opportunities in the U.S," Reuters reported.

Oil wealth: $44 trillion

Morgan Stanley Analysts Stephen Jen and Luca Bindelli say Persian Gulf countries and investment vehicles will continue to invest their growing oil wealth into other types of investments, and the firm predicts a "substantial increase" in the region's overall wealth in the years ahead. They estimate current oil wealth -- or the region's "above ground" wealth -- at $44 trillion.

These sovereign investment funds are "still very young," regarding their transition to financial assets from oil assets, but Morgan Stanley (NYSE: MS) nevertheless expects these funds to become more active in non-oil investments, over time.

Further, part of that effort to invest may be driven by the sheer potential size of their investment pool: Morgan Stanley estimates that the value of the region's oil reserves is more than 28 times their "above ground" wealth.