LONDON: Abu Dhabi government-owned Mubadala Development Company has invited banks to participate in a self-arranged $2.5 billion, three-year club loan to refinance existing debt, banking sources close to the deal said.
Pricing on the revolving credit will not be set until the end of March, but the borrower is looking for a consensus from lenders, the bankers added.
Pricing is expected to be aggressive, and will be a long way inside the cost of insuring Abu Dhabi debt for five years, the bankers said. Abu Dhabi’s five-year credit default swap (CDS) level was 110 basis points on Thursday.
“The borrower expects pricing to be seen in the context of large European corporates, despite the fact they are based in the Middle East, one of the bankers said.
As previously reported, Mubadala has been in talks to refinance and increase its $2 billion syndicated loan that matures in April.
Mubadala will be the second Abu Dhabi-government linked company to tap the loan market this year, following International Petroleum Investment Company’s (IPIC) $2.5 billion, three-year term loan that launched at the beginning of March.
Oil-rich Abu Dhabi, the wealthiest of the seven-member United Arab Emirates federation, is regarded very differently to debt-laden Dubai by lenders and the flow of funds is expected to shift to the richer and more creditworthy Gulf economies, the bankers said.
Mubadala offers comfort to lenders with its 100 percent government ownership and will be able to call on its close relationship banking group to agree a new deal, bankers told TRLPC previously.
There will be no explicit state guarantee for the new loan, however, one of the banking sources said.
The original deal was a $2 billion, three-year club loan that was signed in April 2007 via 21 banks. It paid a margin of 17.5 basis points (bps) over LIBOR, according to Reuters LPC data. – Reuters