‘The deal was heavily oversubscribed at the underwriting level and there is no need for general syndication,’ says a banker close to the deal. ‘There will be some scaling back of allocations, some working through of the documentation but this deal is done and dusted.’
The mandated lead arrangers of the facility are ANZ Investment Bank, Arab Banking Corporationand BNP Paribas. Acting on a best-effort basis they invited a tier of senior underwriters to bid for the combined export credit, commercial debt facility.
‘More than 20 international and regional banks – including the three leads – have participated,’ says the banker. ‘The commercial tranche was very well oversubscribed and there were no problems with the export credit portion.’
The total facility is for $674 million, of which $320 million is made up of export credits and the remaining $354 million is straightforward commercial debt (MEED 15:3:02).
The commercial debt has a pre-completion margin of 175 basis points (bp) over Libor. This rises to 200 bp for the first five years after construction, and then to 235 bp for the last three and a half years. The deal was further sweetened by the offer of 150 bp of up-front fees. The construction period is scheduled to last for 35 months, giving the commercial facility a door-to-door tenor of just under 11 and a half years. The export credit portion has a door-to-door tenor of just under 13 years.
‘We loved the pricing and bought the deal,’ says one of the participants in the transaction. ‘But you could take the view that too much was left on the table for us. As soon as the offtaker on the deal became the central government of India rather than a state government, this became a much simpler deal. The fact that this won’t even make it to general syndication shows it was overpriced.’
Other bankers say the pricing was not too rich, and the strong response at the senior levels was the result of good structuring and ongoing high levels of regional liquidity. ‘It’s not fair to say Omifco was overpriced,’ says another banker. ‘It was a complex deal and only months ago people were warning there was a real danger of syndication failure. It is nothing more or less than a success.’
There is pressure on the project sponsors to wrap up the financing before the end-May expiry of the validity of the bids for the engineering, procurement and construction (EPC) contract. This was awarded in late April to a joint venture of Italy’s Snamprogettiand Paris-based Technip-Coflexip(MEED 26:4:02, Petrochemicals).