Published: June 24, 2009
International Petroleum Investment Company (IPIC), a state-owned petroleum company based in Abu Dhabi, is launching a US$3.5bn syndicated loan, which is set to be the biggest Middle East loan so far this year.
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 margin on the A loan is 250 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.
A banker who worked on the deal tells emeafinance: “I think it is the biggest deal in the Gulf this year. It’s in the process of raising it at the moment. They are currently gathering banks together, supported by co-ordinators Bank of Tokyo-Mitsubishi, HSBC and Santander. The deal is expected to fund for the end of the month and close formally by the end of July.”
IPIC will use the financing for the acquisition of shares in Cespa, a Spanish petrochemicals company; Nova Chemicals, a specialist chemicals manufacturer in Canada; and refinancing previous acquisitions of EDP in Portugal and MAN Ferrostaal.
This deal might indicate a re-opening of the market, according to a source. “We think this will precedent a re-opening. The initial indications of banks are to support the deal, so I think that a lot of banks are interested. It suggests that the appetite is returning to lend quality credits in decent structures. It is to be hoped that the success of this deal will lead to a wider thawing of credit conditions across the region.”
In April, IPIC was assigned an ‘Aa2’ rating by Moody’s, and ‘AA’ rating by S&P and by Fitch with a stable outlook.
Over the past 24 years, IPIC has built a portfolio of long term investments to which it is committed as a strategic shareholder. Whilst initially growing at a moderate pace, the company’s investment activities were accelerated significantly over recent months. According to data by Moody’s, IPIC’s total pro forma portfolio value is US$16.4bn.