Arab Banking Corporation (ABC) is raising a $100 million term loan, providing finance for general purposes. It is the first time the Manama- based bank has raised such a facility and the loan is receiving much early interest, according to the arranger, The Sumitomo Bank.
The last ABC group member to come to the market was the London-based ABC International, which raised a $100 million five-year loan in May 1993. The new loan reflects an upturn in Euromarket activity by Gulf borrowers.
Sumitomo’s London branch has three loans in the market: the ABC facility; a $250 million, five-year loan for Qatar; and a $50 million loan for Aluminium Bahrain (Alba). Alba has also completed a seven-year floating rate (FRN) note offering, arranged by Bank of Bahrain & Kuwait. Both Alba loans are to refinance outstanding bank borrowings (see Bahrain).
Demand for Gulf paper is relatively strong, bankers say. Alba’s seven- year FRN – priced at 3/4 per cent over the London interbank offered rate (Libor) – was well received by the market and the issue was doubled to $100 million.
ABC’s $100 million, three-year bullet loan was launched on 2 December and is expected to be in place by early January. Interest has been stimulated by the nature of the borrower, which is well known to a large group of relationship banks through its extensive international operations, bankers say.
It is priced at 3/8 per cent over Libor. Banks taking $10 million will receive front-end fees of 22.5 basis points (bp); those taking $5 million are paid 17.5bp.
The May 1993 ABC International loan, arranged by Chemical Bank, was priced at 5/8 per cent over Libor.
The new loan for Alba is priced at 60 bp over Libor with bullet repayment after five years. Participation fees are 25 bp for $10 million, 20 bp for $7.5 million, 15 bp for $5 million and 10 bp for $2.5 million. It will also be used to refinance existing debt.