Qtel launches $2 bn refinancing loan

LONDON: Qatar Telecommunications Co has launched general syndication of a $2 billion loan that will result in a reduction in its borrowing costs, the arranging banks announced.

The loan is already fully subscribed, with 14 banks on the deal. Funds raised in general syndication will be used to scale back the banks' commitments, a banker close to the deal said.

Qtel is refinancing a $2 billion forward-start loan agreed last September. It is the latest in a string of borrowers to replace a forward start signed last year following a dramatic reduction in pricing for highly rated companies in Europe and, to a lesser extent, the Gulf.

Forward-start loans were popular in 2009 for companies facing maturing loans, as they enabled borrowers to extend the deals in return for a hefty increase in pricing on the existing credit. However, in light of falling margins, they are now looking expensive, and borrowers are keen to replace them.

As previously reported, the new deal is split between a $1.25 billion, three-year tranche that pays a fully drawn margin of 125 basis points (bps) over LIBOR and a $750 million, five-year tranche that pays a fully drawn margin of 155 bps, according to bankers close to the deal.

It is the first Gulf borrower to secure a five-year maturity since the global financial crisis.

Last year's $2 billion forward start loan paid a margin of 250 bps over LIBOR and the original three-year, $2 billion revolving credit facility agreed in November 2006 paid 22.5 bps over LIBOR.

Initial mandated lead arrangers and bookrunners on the new loan are BNP Paribas, DBS, Qatar National Bank, Societe Generale and Royal Bank of Scotland. Qatar National Bank acted as the financial adviser to Qtel.

Ahead of launch of general syndication, the bookrunners were joined by Barclays, Bank of Tokyo-Mitsubishi UFJ, Deutsche Bank, HSBC, Samba, SMBC, Standard Chartered Bank, WestLB and Citibank as initial mandated lead arrangers, the statement.