It is understood that Goldman Sachs, Credit Suisse First Boston (CSFB), Morgan Stanley, BNP Paribasand HSBCare among the banks to have received the RFP. Prospective bidders have until 31 October to submit their proposals and it is expected that meetings will be called from about 10 November onwards.
RasGas has experience of bond issues. In December 1996, it staged the first project bond in the GCC with a two-tier, $1,200 million issue lead arranged by Goldman Sachs and CSFB (MEED 3:1:97).
‘The decision to refinance the commercial debt with a bond is important and reflects a number of issues in Qatar,’ says one of the potential bidders. ‘Doha is conscious of its future borrowing requirements and the need to access different liquidity pools. Refinancing with a bond frees up some room for commercial bank borrowing. It should also bring down the pricing.’
The RFP specifically asks for prospective bidders to outline how they might structure the transaction to appeal to a new class of institutional investor. ‘It doesn’t want to see these instruments ending up on the balance sheets of banks that would lend to them anyway,’ says another banker looking at the deal.
The desired shape of the distribution of the issue could impact the selection of lead arrangers. If the focus is on selling into the US market, a single mandate might be awarded to one of the strong US-oriented bond houses. However, if the aim is for diversification throughout the US and Europe, a shared mandate could be awarded to a US/European pairing.
The timing of the issue is likely to be impacted by the pre-payment penalty clauses attached to the existing loan agreements. ‘We are probably looking at having everything in place by March because of this,’ says one of the prospective bidders.
It is understood that RasGas is unlikely to seek long-tenor instruments. ‘It looks like it is aiming to match the tenor with the life of the existing debt, which goes out to about 2009, so these will probably be five-year instruments,’ says the banker.
Potential pricing patterns are already provoking debate. The existing RasGas bonds were rated above Qatar’s sovereign ceiling at the time of launch, mainly because of the higher rating of the South Korean offtaker. However, the dramatic improvement in the economic health of Qatar and the difficulties faced by Korea in the intervening period have seen the position reversed. Rating agency Standard & Poor’scurrently puts Qatar’s sovereign foreign currency ceiling at A+ and South Korea’s at A-.