Arab Petroleum Investments Corporation (Apicorp) has signed its debut five-year Euroloan for $225 million, which it will use to finance future energy and chemicals investments and lengthen the maturity of its liabilities. The pricing of the loan, which is 32.5 basis points over the London interbank offered rate (Libor), is one of the lowest obtained for term financing by any Gulf Arab borrower.
‘Up to now we have been relying on deposits from banks to supplement our equity,’ says general manager Nureddin Farrag. ‘We thought it was time now, with Apicorp reaching the age of reason [the company is 21 years old], to introduce an element of stability into the structure of our finances.’
Based in Saudi Arabia, Apicorp is owned by 10 oil-exporting Arab states and had assets of $1,354 million at the end of 1996. The company is active as an arranger and underwriter of project and trade financing in the Arab world and has a $140 million portfolio of investments in Arab oil and petrochemicals-related companies.
The loan was arranged by Arab Banking Corporation, Bank of Tokyo-Mitsubishi, Deutsche Morgan Grenfell, JP Morgan Securities and Union Bank of Switzerland. An Apicorp statement, issued at the signing of the loan on 30 July, said that the company had originally sought $150 million but decided to take $225 million after the facility was oversubscribed. Farrag expects Apicorp to return to the markets over the next few years, with the aim of increasing the proportion of its medium-term debt until it is at least equal to the short-term interbank funding on which the company currently relies.