A fully-underwritten offer by a group led by Citibank to the treasury for a $200 million, one-year loan expired on 11 November. The loan was to be for the Soil Products Office (TMO), the country’s state grains board. Banking sources say the treasury’s failure to respond with a mandate for the deal by the offer’s expiry now means the institution will have to accept prevailing market conditions in any further negotiations.

After one-and-a-half months of negotiations, the Citibank group had finally brought its offer down to interest of 70 basis points over the London interbank offered rate (Libor), and an all-in price including fees of 125 basis points over Libor, according to the banking sources.

The Citibank group made the reduction after Sumitomo Bank offered an all-in price of 92-95 basis points over Libor. However, Sumitomo subsequently failed to establish an underwriting group from banks on a best-offers basis, according to the banking sources.

The Citibank group included Sanwa Bank, Krediet Bank and ABN AMRO. Each group member had committed to underwrite $50 million of the loan.