In early 2008, Emirates Steel launched a bid to refinance a $600m bridging loan with a longer-term facility. It planned to follow this with $1.5bn in project finance debt.

However, according to bankers close to the deal, matching the low cost of the $600m loan, which was priced at just 25 basis points over the London interbank offered rate (Libor), has proved difficult. Recent financing deals have typically being arranged at more than 100 basis points over Libor.

Instead, the firm is using an additional $700m short-term bridging loan, in the expectation that the debt market will recover by 2009. At that point, the steel firm will use one long-term financing package.

The $2bn to be raised in 2009 is split between $1.5bn for the expansion of its Taweelah steel plant, and the refinancing of the recent 18-month bridging loan.

It is expected that Abu Dhabi Basic Industries Corporation (Adbic), which controls Emirates Steel, will also look to retender the financial advisory mandate for the long-term financing.

Of the nine banks that financed the original $600m bridging loan, First Gulf Bank and Qatar National Bank have dropped out.

This leaves HSBC, Natixis, Union National Bank, National Bank of Abu Dhabi, Arab Banking Corporation, Mizuho Financial Group and HVB/Unicredit Group.