Posted on October 02, 2011

The syndication of the debt and Islamic facilities backing the US$10bn Barzan gas project in Qatar has been completed with the group containing a mix of Gulf, international, Japanese and American banks.

European banks, up until now the mainstay of the global project finance market, were largely, but not totally absent, from the deal. The Europeans have been hit by problems in raising dollar funding as the eurozone crisis has intensified. And the Barzan loan, a long term 16 year deal, is denominated in dollars.

European banks have funded one third of the international project market loans in the first half of this year, with the French banks leading the way, and would have been keen takers of the Barzan deal in the past. The Qatar Petroleum sponsored deal, when it reaches financial close in November, will contain US$4bn of commercial debt and Islamic facilities plus US$2.6bn of export credit linked debt from Japan's JBIC/Nexi, South Korea's Kexim/K Sure and Italy's Sace.

The syndication raised US$5.5bn from commercial banks but this will have to be cut back to US$4bn and possibly more if a bond issue is placed. The bond issue is either planned for later this year or early next year, depending on market conditions. A potential role in the bond issue, plus Exxon's 7% stake in the scheme, encouraged American banks into the deal.

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Pricing on the commercial loan is very competitive at 130bp rising to 175bp, 190bp and 200bp with the Nexi tranche at 130bp flat, Sace, 150bp flat and Kexim, 170bp flat.

The bank group is - Al Khalij Commercial Bank, Apicorp, ANZ, Bank of America, BTMU, Barclays Capital, Citigroup, Commercial Bank of Qatar, DnB Nor, Doha Bank, International Bank of Qatar, JP Morgan Chase, HSBC, KfW Ipex, Mizuho, National Bank of Abu Dhabi, Qatar National Bank, Riyad Bank, Royal Bank of Scotland, Samba, Siemens Financial Services, Standard Chartered, SMBC, UNB Qatar plus Barwa Bank, Masraf Al Rayan, Qatar International Islamic Bank, Qatar Islamic Bank on the Islamic side.

Credit Suisse and WestLB joined solely on the Kexim/K Sure and Sace covered tranches.


by Rod Morrison

source: Reuters

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