Abu Dhabi Sewerage Services Company (ADSSC) is planning to refinance a $400m loan secured in September 2009 to build two wastewater treatment plants in a project known as the Second Independent Sewerage Treatment Plant (ISTP2).

The original deal was signed at the peak of the financial crisis. As a result, it is some of the most expensive project debt in Abu Dhabi. It was priced between 300 and 325 basis points above the London interbank offered rate (Libor).

ADSSC is currently looking to appoint a financial adviser for the refinancing, and France’s BNP Paribas is understood to be favourite for the role. The French bank was adviser on the original deal.

Existing ISTP2 lenders
Bank Country
BNP Paribas France
ING Bank Netherlands
Mizuho Japan
National Bank of Abu Dhabi UAE
Natixis France
Sumitomo Mitsui Banking Corporation Japan
Credit Agricole France
Bank of Tokyo Mitsubishi Japan
Source: MEED

If the refinancing goes ahead, it will be the second time Abu Dhabi has taken advantage of a recovery in the financial sector to refinance expensive debt put in place in 2009. In June, the owners of the Shuweihat 2 power project refinanced the $2bn of debt on the scheme, replacing part of the debt with a $825m bond and the rest with a new bank loan that had an interest rate 1 per cent lower than the original debt.

The ISTP2 deal was one of the main regional financings to be affected by the financial crisis. It hit obstacles in late 2008 when France’s Calyon pulled out of commitments to underwrite more than $1bn of loans to two projects; ISTP2 and Shuweihat 2. Eventually both schemes were funded by short-term loans that were later refinanced with expensive long-term debt.