Aluminium Bahrain (Alba) is currently pricing a $500m-plus amortising commercial loan for its sixth potline smelter expansion.

Banks say they expect the loan syndication to go ahead in the next month.

The financial advisers are the US’ JPMorgan and the local Gulf International Bank and National Bank of Bahrain.

The commercial bank tranche will be followed by a capital markets tranche, either a bond or sukuk (Islamic bond) issuance, and an export credit agency (ECA) tranche.

The entire finance package for the $3bn project could be about $2bn.

The pricing is likely to be more favourable than for Bahrain’s sovereign debt. This is due to Alba’s low leverage, its existing revenue streams and strong financial history.

The loan will price somewhere in the region of 300 basis points over interbank rates, according to predictions by bankers.

The details of the ECA tranche have yet to be finalised. Its composition will depend on the suppliers selected for the projects and their access to credit and ECA finance.

Alba also plans to seek a credit rating ahead of the bond or sukuk issuance.

The aluminium company awarded the main engineering, procurement and construction management (EPCM) contract to the US’ Bechtel.

The project will make Alba the world’s largest single-site aluminium smelter, boosting the site’s production capacity by 540,000 tonnes a year (t/y) to 1.5 million t/y. It also includes a power plant.

The budget was cut from $3.5bn to $3bn in response to low oil prices, Alba announced in May.

Several Bahraini state-owned companies are tapping the market to fund their projects, led by Oil and Gas Holding Company (Nogaholding).