Saudi Arabia’s Etihad-Etisalat (Mobily) has set pricing for a SR10bn ($2.66bn) loan deal at an aggressively low level after receiving commitments from just a few banks to finance the whole deal.

Responses from banks on the deal were received on 3 October, and Mobily has now told banks the pricing it will offer on the deal, which is split into four different tranches, and asked for them to confirm commitments by 25 October.

Pricing starts at just 65 basis points above the Saudi interbank offered rate (Sibor) for the Saudi riyal commitments to a working capital facility, and is 70 basis points for the five-year amortising loan and seven year bullet repayment tranche. Dollar commitments are priced slightly higher. Bankers say pricing has been set beneath the average offer by lenders and that the low pricing has surprised many lenders.

However, the deal was understood to be around four times oversubscribed after the initial responses were in at the beginning of October. Several Saudi banks have already agreed large commitments at the pricing offered by Mobily. One source close to the deal says international banks have been approached to join the syndicate, but their participation is still uncertain given how low the pricing is.

Mobily and its financial adviser on the transaction, the local Samba, are planning to close the deal by the end of the year.

One of the four tranches in the current financing is expected to be refinanced through an Islamic bond issue (sukuk) that could take place in 2012. Mobily started approaching banks to fund its latest deal in mid-September (MEED 23:09:11). The loan will be structured to be Sharia-compliant and is based on the sale of airtime on the Mobily network, which the company then sells to its customers at a profit for the lenders. It is a similar structure to the one used in a previous Mobily financing.