Abu Dhabi-based Emirates Steel has confirmed it has secured a $1.3bn credit facility from a group of 19 local and international banks.

The corporate debt facility was raised to refinance an existing $1.1bn project finance debt raised in 2010 and used to support the expansion of the company’s Mussafah plant, as reported by MEED in February.

Refinancing the transaction with a corporate debt structure, with no government guarantees, has helped reduce the steel company’s borrowing costs. The company also extended the tenor of the loan to eight years.

As the original steel plant expansion is completed, the lenders no longer needed to price in any completion risk.

The transaction was brokered by French bank BNP Paribas and was four times oversubscribed.

The 2010 financing was put in place to fund phases one and two of the expansion of the Mussafah plant, both of which are now complete and have increased the capacity of the plant to 3.5 million tonnes a year (t/y).

The financing featured two tranches; one $242.5m Islamic term facility provided by UAE-based Abu Dhabi Islamic Bank, Al-Hilal Bank and Dubai Islamic Bank, and a $1.06bn conventional term facility.

The following banks joined the conventional loan portion.