Lender secures attractive pricing on new facility
Commercial Bank of Dubai (CBD) has raised a $450m loan, capitalising on improved conditions in the syndicated loan market.
The three-year loan, signed at the end of 2013, was priced 1.25 per cent above the London interbank offered rate (Libor), which is far lower than the pricing seen on its 2011 facility that it prepaid in October 2013, according to a source close to the deal.
The pricing is also more attractive than the price of the banks debut international bond, issued in May 2013. The $500m issuance of conventional bonds was priced at about 250 basis points.
The loan was arranged on a club basis between nine key-relationship regional and international banks, all participating as mandated lead arrangers rather than arranged as a pure syndication, says a source.
Before the 2008 global crisis, syndicated loans were often arranged by a number of lead arrangers who underwrote the transaction before selling it down to other lenders. Due to diminished risk appetite, these types of transactions are now limited.
Banking sources suggest that although financial institutions can secure better-priced loans in the current lending environment, the attractive market conditions could change as the new Basel III regulations are brought in.
One source says regulations will make it harder for banks to lend to each other and there will be little return on capital from straightforward lending.
In the long term, banks are more likely to raise money from the bond market, he says.
The banks participating in CBDs loan are:
- Arab Banking Corporation (Bahrain)
- The Bank of New York Mellon (US)
- Citibank (US)
- Commerzbank (Germany)
- ING (Netherlands)
- JP Morgan (US)
- National Bank of Abu Dhabi (UAE)
- Natixis (France)
- Standard Chartered (UK)
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