Mobily aims to close $2.7bn loan deal before year end

05 December 2011

Saudi mobile operator received strong bank response to loan deal

Saudi Arabia’s Etihad-Etisalat (Mobily) is hoping to close a SR10bn ($2.66bn) loan deal before the end of the year after receiving a strong response from local banks to the deal, but little appetite from international lenders.

The deal was originally marketed to both Saudi and international banks in order to raise both Saudi riyals and US dollars, but banking sources say the dollar lenders baulked at the low pricing offered by Mobily. Saudi lenders have committed to funding the entire deal in riyals at pricing starting at just 65 basis points above the Saudi interbank offered rate (Sibor). The deal was around four times oversubscribed just from Saudi bank commitments.

One Dubai-based banker at an international bank who had meetings with Mobily about the deal says the low pricing offered was the main reason international banks are not involved in the loan. “They wanted to have some international banks in the deal, but at double-digit pricing levels it was impossible to get any involved as that is below most banks’ cost of funding,” says the banker.

The bank group on the deal is now expected to include National Commercial Bank, Sabb, Banque Saudi Fransi and Samba, which is also acting as financial adviser to Mobily.  “This is effectively a done deal now, the bank group is there and in a few weeks it should reach financial close once all the documentation is in place,” says one banker in the kingdom.

The deal will be split into several tranches, including a working capital facility, a five-year amortising loan and seven-year bullet repayment loan. Pricing on the later two tranches is 70 basis points above Sibor. The financing is Sharia-complaint and is based on the sale of airtime on the Mobily network, which the company then sells to its customers at a profit for the lenders (MEED 21:10:11).

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