Nakilat holds talks with banks over $350m loan

24 February 2010

Qatar Gas subsidiary considers appointing lead arrangers

Qatar Gas Transport Company (Nakilat) is in talks with banks about arranging a loan of up to $350m.

Nakilat has been approaching potential mandated lead arrangers for the facility and is looking to appoint banks by the end of the first quarter, according to bankers.

The deal could have a tenor of about five to seven years, although the structure of the loan has yet to be finalised.

Nakilat is in talks with several international banks about the deal, but according to sources, the discussions are still at an early stage and it is unclear how they will progress. Qatari banks are not involved because the deal will be funded in dollars and Qatari banks are currently only providing funding in local currency.

The pricing of the loan is likely to be based on sovereign bonds issued by Qatar.

“Pricing on the five-year Qatari sovereign bond will be a good indicator where a Nakilat deal would be priced if it is launched,” says a banker in Qatar.

The spreads on the credit default swaps of the five-year Qatari sovereign bond are currently about 106 basis points, and pricing on the Nakilat loan should be slightly higher than this level.

Nakilat’s last deal was a $1bn ship financing deal that was completed in May 2009. The deal was arranged by France’s BNP Paribas and was priced at 300 basis points above the London interbank offered rate (Libor).

That financing was the third phase of plans to fund the acquisition of 25 gas shipment vessels under construction in South Korea.

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