Export credit focus for Bahrain LNG loan

31 March 2016

Adviser prepares to syndicate loan

Bahrain LNG is expected to bring a $600m-plus project finance deal for its liquefied natural gas (LNG) import terminal project to the market soon.

France’s Societe Generale is the adviser for the loan, and has taken informal soundings from banks, sources have told MEED.

The finance will have a 20-year tenor.

The deal is expected to rely on export credit agency (ECA) support. Korea Trade Insurance Corporation (K-sure) will cover commercial lending for the majority of the loan. This will bring the pricing on the tranche in line with A-rated South Korea’s sovereign risk, plus a Bahrain premium.

There will also be a smaller, uncovered portion. Since Bahrain’s sovereign rating was downgraded to below investment grade, bankers expect margins in the kingdom to rise above 300 basis points.

The US’s Shearman & Sterling is the legal adviser to the lenders. Canada-based Verus Partners is advising the offtaker, Bahrain’s National Oil & Gas Authority (Noga).

Noga awarded Bahrain LNG the main deal to develop the terminal in 2015. Bahrain LNG is a consortium of US-based Teekay LNG Partners, South Korea’s Samsung C&T and Kuwaiti group Gulf Investment Corporation (GIC). Teekay owns a 30 per cent stake, while Samsung holds 20 per cent. Singapore-based equity investor GIC owns 20 per cent, with Noga’s parent company, Nogaholding, taking the remaining 30 per cent.

The total cost of the 800 million-cubic-feet-a-day LNG project is thought to be about $900m.

The consortium signed a build-own-operate-transfer (BOOT) contract to develop the scheme. The 20-year own-and-operate period starts in mid-2018.

It is the first public-private partnership (PPP) project of its type in the region.

Nogaholding recently secured $570m in corporate finance.

Another Nogaholding subsidiary, Bahrain National Gas Company (Banagas), is seeking more than $400m in finance to expand its gas processing facilities.

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