‘In all probability, this tranche is going to end up pretty large,’ says one of the potential participants. ‘At the sounding out stage they were looking for $600 million or so: they’ve received bids for this amount from four Abu Dhabi banks alone. This tranche will end up somewhere between $1,000 million-1,200 million. One of the main results of this is the banks that were hoping to negotiate some upwards movement on fees are almost certainly going to end up disappointed.’
Among the interested UAE financial institutions are National Bank of Abu Dhabi
, Union National Bank
, First Gulf Bank
, Abu Dhabi Commercial Bank
, Abu Dhabi Investment Company
, National Bank of Dubai
and Emirates Bank International
The tranche, which was primarily targeted at UAE-based banks, is also notable for the number of non-local financial institutions involved. Barclays Capital
, Standard Chartered Bank
, BNP Paribas
, Arab Banking Corporation
and Gulf International Bank
are all expected to join the transaction.
‘The schedule sees the full group mandated within three-four weeks and the bridge signed and funded by early August,’ says a source close to the deal.
The club deal has a tenor of five years, with a step-up pricing structure starting at 45 basis points (bp) over Libor. The focus from Dolphin was on the first two years – by which point the permanent limited-recourse project finance is scheduled to be put in place – and the market was given greater freedom to price the back three years. However, the competitive average margin of 50 bp will have pleased the project’s sponsors.
‘Attractive pricing such as this widens the window available for getting the permanent project finance in place: it reduces the urgency and sets a benign pricing marker,’ says a banker close to the deal.
The local tranche is structured as a corporate loan with guarantees from Dolphin’s shareholders: Abu Dhabi’s Mubadala Development Company
, with 51 per cent; France’s Total
, with 24.5 per cent; and the US’ Occidental Petroleum
, also with 24.5 per cent.
When the conventional bridge package is in place, Dolphin is expected to turn its attention to securing an Islamically structured bridge. There is a possibility it will be fashioned to ease its evolution into a longer-tenor facility.
Dolphin is also understood to be at an advanced stage of negotiations with Japan Bank for International Co-operation (JBIC) for what could be the baseload tranche of permanent financing for the project. The agreement will be underpinned by Japanese offtake of a substantial proportion of the 60,000-70,000 barrels a day of condensates and liquefied petroleum gas (LPG) which will be produced from Dolphin’s gas processing facilities in Ras Laffan (MEED 10:10:03).