General syndication of a $500 million term loan for Samba Financial Services was launched on 6 October, with a deadline of 30 October set for the receipt of commitments. The mandated lead arrangers on the five-year deal are Arab National Bank, BNP Paribas, Citibank, Deutsche Bank, Gulf International Bank, JP Morgan, Qatar National Bankand Standard Chartered Bank.
Citibank and JP Morgan have fully underwritten the transaction and are both acting as bookrunners. JP Morgan is also acting as the facility agent. The bullet term loan carries a margin of 37.5 basis points over Libor. 'This is an interesting deal for a number of reasons,' says a banker involved. 'It is the first FI [financial institution] syndication by a Saudi bank and it is the biggest such FI term loan this year from the region. But the really interesting question is why Samba is doing this. It has been lending aggressively this year - you can see it in the sharp step-up in profits - and it needs some longer-dated liabilities to match the tenor profile of their assets.' The upward movement of asset/deposit ratios across the Saudi banking community has been marked this year in the face of strong credit demand from both the corporate and the retail sectors. Banking sources suggest that while Samba may be the first Saudi bank to tap the syndicated loan market, it is unlikely to be the last this year. They add that the implementation of the capital markets law will open up the possibility of banks staging bond issues to further diversify funding sources and stretch the tenor of the liabilities side of their balance sheets.
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