State-owned Qatar Telecom (Qtel) has approached a group of its core banks to finalise terms for a $2bn loan facility and appoint mandated lead arrangers (MLAs) for the deal.
On 12 April, Qtel approached several of its key relationship banks to discuss terms on the deal. Qtel first approached banks in mid-March, and asked them to respond to a request for proposals (RFP) to fund the deal by the end of March. Mandated lead arrangers were asked to commit up to $500m.
Among the banks approached are the UK’s Barclay’s Capital and Royal Bank of Scotland, France’s BNP Paribas, Singapore’s DBS Bank, Japan’s Mitsubishi UFJ, and Qatar National Bank. Those banks also worked on an existing $2bn Qtel loan that was arranged in September 2009 and matures in November 2011.
The existing deal pays a margin of 250 basis points above the London interbank offered rate (Libor). Qtel hopes that it will be able to significantly reduce that to closer to the Qatar sovereign credit default swap (CDS) rate, which is currently under 100 basis points.
Pricing on the new deal is still being finalised. A source close to the new deal says Qtel hopes to finish talks and get the funding in place before the end of the month. It has not yet been decided if a wider syndication will occur, he adds. Instead, once the pricing has been finalised and MLAs appointed, additional banks could be invited to lend to the deal on a club basis, and the MLA contributions reduced.
The new loan will have a tenor of three years, although Qtel is also looking for a five-year tranche, but bank appetite for the longer tenor is understood to be weak. The deal will be the second major loan deal in Qatar this year, after the successful completion of a $650m loan for Qatar Aviation Leasing in mid-March.