The $500 million, 10-year commercial facility was well received in syndication, with nine banks signing up for a total of $145 million. Given the original syndication target of about $60 million, the sell-down must be regarded as a success. All but one of the participants were regional institutions, with Barclays Capitalthe surprising exception. The commercial tranche has a step-up pricing structure which starts at 80 basis points (bp) over Libor and holds for the first three years, then rises to 90 bp for the next three years and to 105 bp for the remaining four years (MEED 17:1:03). The base ticket offered at the beginning of syndication was $20 million and carried fees of 85 bp. The lead arrangers on this tranche were Bank of Bahrain & Kuwait (BBK), Bank of Tokyo-Mitsubishi, HSBC, Saudi British Bank, National Bank of Bahrain (NBB), Qatar National Bank, Gulf International Bank (GIB), Mizuho Financial Group, National Bank of Abu Dhabiand Sumitomo Mitsui Banking Corporation(MEED 6:12:02).

The $300 million metals facility was also well received in syndication, not least because of its comparatively attractive pricing. Some regional banks seemed to take the view that the risk profile of the metals tranche was the same as that of the commercial tranche and the flat margin of 100 bp slightly better. Those that had balance sheet strength took advantage of the larger tickets offered and total participation reached $295 million, considerably exceeding the $230 million sell-down target set at the start of syndication (MEED 2:7:03). Goldman Sachs and GIB were the lead arrangers.

The $250 million, Islamically-structured tranche attracted a warm response too, with three regional houses participating, joining the lead arranging group comprising ABC Islamic Bank, Dubai Islamic Bank, HSBC Amanah Finance, Riyad Bank, Islamic International Arab Bank, BBK and GIB.

The fourth tranche, a $200 million local currency bond issue, is in the process of being placed by Securities & Investment Company, NBB, BBK and Gulf Investment Corporation. Banking sources say the process will be completed by the end of April.

Controversy continues to surround the $300 million fifth tranche, which was originally flagged as being sourced from the Japan Bank for International Co-operation (JBIC). However, some international banks - especially BNP Paribasand HSBC - have been pressing hard for a European export credits facility.

'There is little doubt that the JBIC solution would be far cheaper and more simple,' says a banker close to the deal. 'But immense pressure has been applied and there are elements within MoFNE [the Ministry of Finance & National Economy] that are attracted by the export credits approach. Negotiations are continuing on both fronts and the longer they go on, the better the prospects for the European solution get.'

Taylor-DeJongh, in association with Bahrain-based Islamic Finance Consultants, has acted as financial adviser to Alba.

Bankers have pointed to the comparatively small role played by international banks in the Alba financing. Of the 36 banks participating in the three tranches signed, only eight are international, and three of these are Japanese, reflecting the sizeable proportion of Alba's offtake lifted by Japanese trading houses.

'Some of the explanation for this comes from the comparatively low pricing, some from the high liquidity of the regional banking community, but it also illustrates that the queue of international banks wanting to commit balance sheets to regional financings is getting shorter and shorter by the month,' says an international banker active in the region. 'That's OK as long as regional liquidity holds up, but it won't for ever and that's when serious problems could start.'