Banks positioning for refinancing work in 2011
Saudi Arabia’s Etihad-Etisalat (Mobily) is due to sign a SR1.2bn ($320m) Islamic loan deal with a group of local banks on 20 December.
The deal has very low pricing, but banks have been attracted to the loan on the promise that lenders will play a key role in the telecommunication firms refinancing due in 2011, which bankers say totals about SR18bn.
“Banks have been invited in on the promise of a role in the refinancing coming up next year. That could potentially include a large syndication and maybe a sukuk [Islamic bond] issue, as well,” says one Riyadh-based banker involved in the deal.
The current deal has a tenor of 12 months with an option to extend the maturity by an additional six months. Pricing is 65 basis points above the Saudi interbank offered rate (Sibor), with bankers earning an additional 5 basis points fee, with a further 2.5 basis points added if the extension option is taken.
“Pricing on this is very low,” says a another banker in the transaction. “But the Saudi banks like the Mobily story and they have executed well on their strategy.”
The lending group includes Banque Saudi Fransi, which is also acting as documentation bank, Samba, National Commercial Bank, Sabb and Riyad Bank. The deal is structured as a commodity murabaha.
Mobily launched the latest deal, which will be used for capital expenditure and general corporate purposes, in early December. Once signed, first drawdown on the new facility is expected to occur on 25 December.
In May 2009 the company also raised a SR1.5bn loan, arranged by Samba, that was used to refinance debt taken on to finance the acquisition of local data provider Bayanet al-Oula (MEED 29:05:09). That deal closed in October 2009 and had a tenor of four years. Loans were provided by Samba, Riyad Bank, Sabb, and National Commercial Bank.
Mobily reported profits of SR1.14bn in the third quarter of 2010, an increase of 40 per cent on the previous year. The UAE’s Emirates Telecommunication (Etisalat) is a major shareholder in Mobily.
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