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29 March 2024

Taqa marketing $3 billion 5-year loan to banks

Published
By Reuters

Abu Dhabi National Energy Company (Taqa) is marketing a $3 billion, five-year loan to banks after receiving initial commitments from eight local and international banks, four sources aware of the matter said on Thursday.

The loan amount, which will be used to consolidate existing debts into one facility with a lower rate of interest, is smaller than the $3.5 billion that sources indicated last month the energy firm was looking to raise.

However, the overall size of the facility could be increased depending on the response from banks invited to back the deal, according to one source who spoke on condition of anonymity as the information is not public.

Taqa declined to comment.

Taqa's Abu Dhabi-listed shares were down 8.6 per cent at Dh0.64 as of 0743 GMT.

The firm joins other Gulf-based companies in taking advantage of the strong liquidity of local banks to try to lower borrowing costs.

Energy firms are also looking to boost cash reserves to help them weather a downturn in oil prices since last year.

The marketing period began on June 14, the source and a second source said, with both indicating that the loan was expected to close in the latter half of July.

Base pricing on the revolving credit facility is 50 basis points over the London interbank offered rate (Libor), but the return for banks will be increased by different fees, including some for initially committing to the loan and if the company doesn't draw down on the funds, two of the sources said.

Should all the fees be triggered, banks will earn closer to 100 basis points, one of these sources said.

The eight banks which have already backed the loan are facility coordinators Bank of Tokyo-Mitsubishi and National Bank of Abu Dhabi, as well as BNP Paribas, First Gulf Bank, HSBC, Mizuho, SMBC and Societe Generale, according to three sources.

Among the existing debts which Taqa could refinance using the new facility is a $2.2 billion loan which is set to mature in December. It also has a $1 billion bond which it could set aside cash for ahead of its maturity in October 2016.