Saudi Aramco and the US Dow Chemical have finally settled pricing for the bank debt on the pair’s $20bn Sadara Chemical project in Jubail, and managed to narrowly beat Qatar’s Barzan gas deal, which closed about a year ago.

Dollar loans for the Sadara scheme will be priced at 125 basis points above the London interbank offered rate (Libor), stepping up to 155 basis points after construction is completed, and then 185 basis points during the 16-year tenor of the loans. Saudi riyal loans start at 75 basis points above the Saudi interbank offered rate (Sibor), stepping up to 120 basis points, and then 135 basis points. For the dollar tranche, banks are understood to have been given allocations of $150m each, down from initial requests of $300m each.

Pricing on the dollar loans for the Barzan deal started at 130 basis points above Libor, although the size of the bank tranche on that loan was much larger at $3.7bn. The pricing will please the sponsors behind Sadara, which had wanted to beat the Barzan deal, but has been less well-received by banks. “We have more to cry about than laugh about with this deal,” says one banker in Riyadh.

Most banks are committing to the loan solely on the basis of their relationships with Aramco and Dow, as the lending itself is not expected to be profitable. The total size of the bank tranche is only thought to be about $1.5bn, down from $2.7bn in the original funding plan for the project as a result of the sponsors attracting more money from other sources.

The financing for the Sadara scheme is not expected to be signed until the first quarter of next year, when a sukuk (Islamic bond) of about $2bn is likely to be launched. A further $6.7bn will come from export credit agencies, and $2.3bn from Saudi government investment bodies.