Qatar Liquefied Gas Company II (Qatargas II)was close to finalising the composition of an expected 10-strong club of mandated lead arrangers (MLAs) for the commercial debt financing on its regassification terminal at South Hook, on the UK's Welsh coast, as MEED went press.

The 25-year facility was increased in size to £430 million ($803 million), from the original £387 million ($722 million) following the submission of marginally higher than expected bids for the project's engineering, procurement and construction (EPC) contract.

Banks looking at the transaction are expecting the pre-completion margin to be about 40 basis points (bp) over Libor. The post-completion margin is expected to start at 65 bp before rising to 75 bp at year 11, then to 90 bp for years 16-20 and 105 bp for years 21-25.

The deal is expected to be structured as a club, but there may be a limited general syndication after financial close, which is scheduled to be staged in the first two weeks of December.

The South Hook facilities were originally to be financed with a 25-year, sterling-denominated bond, for which Royal Bank of Scotland (RBS)and UBS had been awarded lead manager mandates. It is understood that a surfeit of unsolicited offers for commercial debt at competitive prices provoked a change of strategy and the reversion to project finance. However, the economics of the regassification project had been built around 25-year debt - with an average life of 17.5 years - and the exceptionally long tenor was transferred to the commercial borrowing.

Progress has also been made on the financing for Qatargas' two liquefaction trains at Ras Laffan. The US' Export-Import Bank has signalled the availability of up to $930 million of export credits and Italy's Sace is understood to have indicated approvals for up to $795 million worth of credit. The final mix of the multi-tranche financing for the trains will be determined after the award of the main EPC contract, which is expected in early December. With long-lead items being sourced from both the US and Italy, both agencies will be involved, but the total call on export credits is not expected to exceed $1,000 million. The commercial debt tranche - for which a total of $3,600 million has been committed - will be scaled back accordingly.

RBS is acting as Qatargas II's financial adviser.