LONDON: Abu Dhabi government-owned International Petroleum Investment Company (IPIC) has launched a $3.5 billion syndicated loan to support recent acquisitions, two banking sources close to the deal said.
It is the first major new money loan in the Gulf this year, and is expected to act as a barometer for international banks appetite for syndicated loans in the region, the sources said.
I think this will get the market moving . I would expect it to be successful, a senior loans banker at a European institution said. The loan is split between a one-year bridge loan A that will be refinanced by bond issues, and a two-year facility B that is extendable for a further year at lenders discretion, the sources said.
The margin on the A loan is 250 basis points (bps) over LIBOR for the first six months, rising to 350 bps for the next three months and 400 bps thereafter. The margin on the B loan is 350 bps, the sources added.
A limited number of banks are being invited to join the deal as initial mandated lead arrangers.
Around half of the $3.5 billion loan will be taken out by the capital markets, the bankers said.
As reported by Reuters last month, the loan – coordinated by Bank of Tokyo-Mitsubishi UFJ, HSBC and Santander – will be used to finance IPIC s recent acquisitions, as well as for general corporate purposes.
The loan backs IPIC s $500 million takeover of Canada-based raw plastics manufacturer Nova Chemicals Corp, which was approved by shareholders in April, in a deal worth $2.3 billion including Nova s debt.
The loan also funds the borrower s increased stake in Spanish oil company Cepsa. IPIC upped its stake in March to 47 percent by buying a 32.5 percent stake from Santander Group and 5 percent from Fenosa in a deal worth around $4.4 billion.
In April, IPIC was assigned an AA rating by Standard and Poor s and by Fitch, and a Aa2 rating by Moody s.
The new loan is IPIC s second loan this year – in February the company signed a $700 million, three-year deal to back its purchase of a 17.6 percent stake in Oil Search Ltd.
That loan was priced at around 300 bps over LIBOR, banking sources said at the time.
IPIC invests in oil-related projects for the government of Abu Dhabi, the capital of the United Arab Emirates, which is the world s fifth-largest oil exporter. – Reuters
