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Oman's Bank Muscat negotiating pricing for loan refinancing, sources say
[DUBAI] Bank Muscat, Oman's largest bank by assets, is negotiating with regional and international banks the terms of a loan facility expected to total US$550 million to US$600 million, sources close to the situation said on Monday.
The Omani lender and its relationship banks are discussing the pricing of the proposed three-year loan, which would refinance a US$600 million facility that was raised in 2014 and matures in March.
That loan offered an all-in pricing per annum of 140 basis points over the London Interbank Offered Rate, comprising a 1.275 per cent interest margin plus banks' up-front fees. The new financing may offer around 185 bps all-in, said the sources.
Bank Muscat is expected to close the financing by March, they said. Phone calls requesting comment to two top executives of the bank and an email to the bank's investor relations office were not answered.
Bank Muscat also raised a US$315 million, three-year loan in May last year with seven banks. That debt facility offered all-in pricing of 200 bps, two of the sources said.
The pricing of the planned refinancing is likely to reflect radically changed market conditions in the Gulf since 2014, because of much lower oil prices over the past two years and a resulting reduction in regional banks' liquidity.
However, the fact that the planned debt facility is a refinancing could translate into a discount of about 10 to 15 bps compared with the 2016 club deal, despite the larger size of the refinancing transaction.
The 2014 loan was backed by banks including Bank ABC, Bank of Tokyo-Mitsubishi, Citigroup, Commerzbank, HSBC, Mizuho, National Bank of Abu Dhabi, Sumitomo Mitsui Banking Corp and Wells Fargo.
The 2016 facility saw the participation of Bank ABC, Citigroup, Credit Agricole, HSBC, National Bank of Abu Dhabi and Standard Chartered as mandated lead arrangers and bookrunners, joined by Landesbank Baden-Wurttemberg as mandated lead arranger.
Bank Muscat is rated Baa1 by Moody's, BBB- by Standard & Poor's and BBB by Fitch.