A $2bn bond planned to part-finance the Emirates Aluminium (Emal) project could be delayed by at least a year if the contraction in the global credit markets continues in 2008, according to a banking source close to the deal.

Emal had planned to launch the bond in the first quarter of 2008. However, this date is now in question as global credit markets remain apprehensive about the full impact of the US sub-prime crisis, and Emal is not certain that prices will recover in time to make the issue attractive.

The banker says that following the completion of the $1.8bn project finance tranche, Emal has funds in place to cover the first three years of construction and can afford to be more opportunist in selecting an issue date.

“The cash from the bond issue is not needed for financing the construction for the next few years, so it can afford to launch it whenever it wants,” says the banker.

Emal is a 50:50 joint venture of Abu Dhabi’s Mubadala Development Company and Dubai Aluminium Company (Dubal).

The project finance debt is being underwritten by a group of banks, which has expanded from an initial seven to 12. Aspects of the deal have been changed as a result of the credit crunch. Pricing was as much as 25 basis points higher than expected earlier in 2007, according to bankers involved in the deal. Margins start at 55 basis points, rising to 110 basis points over the 16-year tenor.

Banks involved in the underwriting are also understood to want a degree of market flexibility when they take the debt to syndication early in 2008. This would give them the ability to increase pricing on the deal if the market deteriorates further between now and syndication.

BNP Paribas, Calyon, Mashreq-bank, Abu Dhabi Commercial Bank, Royal Bank of Scotland, Standard Chartered and Sumitomo Mitsui Banking Corporation were the original seven banks involved in the deal. They have been joined by Citigroup, National Bank of Abu Dhabi, Export Development Canada and Export Finance & Insurance Corporation of Australia.