State-owned Qatar Telecom (Qtel) has offered banks a margin of 125 basis points above the London interbank offered rate (Libor) on the $2bn loan deal it is currently refinancing, and 11 banks have so far come on as mandated lead arrangers.

A source close to the deal says that now the banking group has been put together, financial close should occur before the end of the month. A wider syndication is then expected to follow when the 11 lead arrangers will sell down their exposure to other banks.

The 11-strong banking group includes 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.

The pricing level being offered by Qtel is a significant reduction from the 250 basis points above Libor that its existing $2bn deal was priced at. Qtel undertook that deal in September 2009 when it was keen to lock in its funding costs fearing that the financial crisis would drive banks to charge even higher interest costs. Instead, only seven months later it has been able to halve the costs of this loan.

The new loan will have a tenor of three years, with an additional five-year facility of about $750m that will be priced at 155 basis points above Libor, reflecting that banks had less appetite for the longer tenor loan (MEED 13:4:10).