Oman LNG (liquefied natural gas), one of the Gulf’s large gas exporters, says it is seeking a credit rating. Bankers take the news to mean the company is considering a bond issue to pay for part of the project’s costs, following the success of a $1,200 million bond sale for Ras Laffan LNG Company (Rasgas) earlier this year.
‘We are seeking a credit rating. That will be a useful adjunct to any future financing,’ says Oman LNG general manager Tony Hanna. He does not say the rating will necessarily lead to a bond issue in the near future, though MEED understands this option has been considered by Oman LNG and its financial advisers, Chase Manhattan. Groundwork on the gas facilities has already begun, and Oman LNG is close to finalising a $2,000 million loan package with banks and export credit agencies, arranged by NatWest Markets and ABN AMRO (MEED 22:11:96).
A bond issue could be used to replace part of the loan finance, to refinance the loans at some later date, or to pay for tankers to ship the gas overseas. Alternatively, the company may not launch a bond issue, but use the possibility of one as a negotiating tool with its lending banks. One US investment banker suggests, however, that it is rare for a project to get a rating for this reason. ‘Projects are relatively complex and you have to pay a lot for a rating, maybe in the hundreds of thousands [of dollars]. A rating is really a means to an end. It signals that you’re considering capital markets financing.’
The success of the Rasgas bond sale, arranged by Goldman Sachs and CS First Boston, and the more recent $225 million Omani sovereign Eurobond arranged by JP Morgan, suggests Oman LNG would get a warm welcome if it chose to issue bonds. Oman LNG resembles Rasgas in that both projects have big corporations among their shareholders – the Anglo/Dutch Royal Dutch/Shell Group, a consortium of big South Korean firms, France’s Total in the case of Oman LNG and Mobil Corporation of the US in the case of Rasgas. Both projects also have long-term supply contracts with Asian importers, and both Oman and Qatar are rated at investment grade by US credit ratings agencies Moody’s Investors Service and Standard & Poor’s.