Mubadala aiming for significant pricing cuts on new loan

03 March 2013

Pricing for new deal is targeted at just 45 basis points

Abu Dhabi’s Mubadala Development Company has set pricing on the $2bn revolving credit facility it is raising at 45 basis points above the London interbank offered rate (Libor), a significant drop on the rates it is currently paying banks.

Pricing at that level would be a significant drop on the 75 basis points above Libor that was agreed by lenders on a $2bn loan arranged for Abu Dhabi National Energy Company (Taqa) in November 2012. It would also make it one of the lowest margins paid by an entity in Abu Dhabi. Mubadala pays 75 basis points above Libor on its existing $2bn loan, which matures in May and will be refinanced with the proceeds from the new deal.

The current deal consists of 21 lenders that make up Mubadala’s key relationship banks. Sources say the low pricing could be an issue for some lenders in the bank group. “Mubadala is a good credit, but pricing is very low on the new deal,” says one banker close to the company. “Banks have got used to relatively high pricing as a result of the financial crisis and now the top names in the region are realising that they can refinance at much lower rates than they were paying.”

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