Syndication market hots up

25 June 2004
Regional syndication desks have been buried under a wave of deals seeking selldown before the traditional summer lull.

Of the five financial institution (FI) deals in the market, the furthest advanced is a $150 million, three-year facility for Mashreqbank. Lead arranged on a sole basis by Bank of America, it is understood that 24 banks have joined at syndication, attracted by offers of $10 million tickets paying fees of 30 basis points (bp) and $5 million tickets paying 25 bp. The debt has a margin of 40 bp over Libor. Signing is scheduled for 7 July.

Bank of Bahrain & Kuwaithas mandated Arab Banking Corporation (ABC), Barclays Capital, Citigroup, National Bank of Kuwaitand Sumitomo-Mitsui Banking Corporationto raise a $100 million, five-year facility. The margin starts at 42.5 bp for the first three years and rises to 45 bp for years four and five.

Also in the market is a $150 million, three-year loan for Ahli United Bank, being lead arranged by BNP Paribas, Commerzbankand Standard Chartered Bank. It carries a margin of 37.5 bp.

On a smaller scale, Bahrain Commercial Facilities Company (BCFC)has mandated BBK and Standard Chartered to raise a $32.5 million, four-year loan with a margin of 80 bp over Libor. BCFC is one of the rare, regular issuers of corporate bonds but this syndicated facility is in addition to its paper programme, rather than a replacement (see Capital Markets, page 38).

The latest FI deal to come to market is a $150 million, five-year facility for Burgan Bank, on which HSBCand Standard Chartered are the mandated lead arrangers. It too has a step-up margin, which runs at 37.5 bp for the first three years and rises to 45 bp for the last two.

The largest deal in the market is the $240 million project borrowing by Oman Polypropylene, being lead arranged by ABC, Arab Petroleum Investments Corporation (Apicorp), BNP Paribas and HSBC. They say they are aiming to raise about $100 million.

Two other, more unusual, deals are also in the market. Regional carrier Gulf Air, long burdened by heavy corporate leverage, has mandated Standard Chartered to arrange an innovative $50 million debt package. The facility is a structured trade finance deal secured against ticket sales receivables. It has a tenor of five years and a margin of 100 bp, and is understood to be attracting a warm response in syndication.

National Iranian Tanker Corporationhas also mandated Standard Chartered to raise a $60 million structured trade finance facility. The five-year package is secured against charter party receivables and has an average life of 2.75 years. It has a margin of 325 bp over Libor.

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