The leader arrangers on the debt package for Abu Dhabi's Shuweihat independent water and power project (IWPP) have altered their approach to the deal and offered new tickets to banks previously invited in at the sub-underwriting level.
'Some banks had been expressing concern about the underwriting risk and about some of the difficulties they were having getting this past credit committees,' says an official at one of the lead arranging banks. 'We've listened to them and given them an alternative route into the deal.'
The lead arranging group is now offering $50 million take-and-hold tickets that will pay a fee of 90 basis points over Libor (bp), and $40 million take-and-hold tickets that will pay 75 bp.
Previously, all that was on offer were $100 million and $75 million sub-underwriting tickets with all-in fees of 90 bp and 75 bp respectively. These two tickets had sell-down targets of $50 million and $40 million (MEED 5:10:01).
Banks have been told those which choose to take on the sub-underwriting risk will be rewarded by an additional 25 bp of fees.
'What we are seeing is, in essence, acknowledgement that the events of 11 September have had an impact on sentiment,' says a banker looking at the transaction. 'The sub-underwriting risk is real, and the arrangers are basically giving something away to try and get around this. But the important thing to remember is that the fundamentals of the deal are just as strong as they've always been.'
This round of the financing is due to close by 19 October. 'If necessary, it will then go straight to general syndication,' says the official at the lead arranging bank. 'But we are still in a good situation with more than enough banks still showing serious interest at this stage.'
The lead arrangers on the deal are Barclays Capital, Citibank, Bank of Tokyo-Mitsubishi, Royal Bank of Scotland, Kreditanstalt fuer Wiederaufbau, National Bank of Abu Dhabi and Abu Dhabi Investment Company(MEED 9:2:01).
The 20-year, $1,285 million facility has a step-up pricing structure that starts at 110 bp until project completion, and then drops to 100 bp until year seven. From years eight to 10 it is priced at 110 bp, then rising to 125 bp for years 11 to 13, 150 bp for years 14 to 16 and 160 bp from then to maturity.
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