Emirates Aluminium (Emal) has received a strong response from banks for a $2.25bn loan that will form the bulk of the financing for its second phase expansion project.

Sources close to the deal say that the bank tranche attracted a great deal of interest from a large bank group. It is still unclear how many banks submitted offers to fund the project, but at one stage there were almost 30 banks looking to fund the deal.

The sponsors, Dubai Aluminium (Dubal) and Abu Dhabi’s Mubadala, are now planning to get the commitment letters signed with banks as quickly as possible. Once this is completed, which could be as soon as next week, banks will be appointed to arrange a project bond of potentially around $1.25bn. A source close to the project says, “No banks will be appointed for the bond issue until commitment letters are signed for the commercial tranche.”

Sources close to the deal say that Emal is eager to get commitment letters signed by lenders as soon as possible, as it is committed to getting the bond issue completed by mid-November. One source involved in the deal says that banks should have a copy of the commitment letters by the end of this week to review the final terms, meaning that by mid-October they could have the letters signed.

Once the sponsors have an idea of appetite and potential pricing on the bond they will decide on the final size of both the bond issue and the commercial bank tranche. In addition the $4.58bn financing will include a $500m export credit agency tranche.

Initial guidelines on the deal suggested pricing could start at around 225 basis points above the London interbank offered rate (Libor), rising to 300 basis points, however Emal may try to reduce this slightly as a result of the good response from banks.