Samref launches $1.4bn financing

16 October 2012

Saudi Aramco/ExxonMobil joint venture seeks funding for clean fuels project

Saudi Aramco Mobil Refinery Company (Samref) has begun to approach banks to raise about $1.4bn for a project to expand and modify its Yanbu refinery.

The invitation to join the financing was sent to banks in mid-October and lenders are being asked to fund a $1bn term loan and a SR1.5bn ($400m) standby facility. The deals will have a tenor of 10 years and both international and local banks are understood to be targeted for the deal.

Samref appointed Gulf International Bank to act as an adviser on the project in June. The funds will be used for the Clean Fuels Project, which involves modifying the existing refinery to lower the sulphur content of its products to comply with new environmental regulations.

Samref, a joint venture of Saudi Aramco and the US’ ExxonMobil, has asked banks to respond with commitments by early November and hopes to have the financing in place before the end of the year.

The funding will be a test of bank appetite for booking new deals in light of tightening liquidity conditions. The loan to deposit ratio of the Saudi banking sector as a whole rose for the fifth consecutive month in August, to 78.7 per cent. As a result, lenders are expected to try to start pushing up the margin on new financing deals after a sustained period of downward pricing pressure.

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