UAE mall developer Majid Al Futtaim (MAF), which pushed back a bond issue citing market conditions, plans to raise $1 billion in three and five-year loans, two sources familiar with the matter said on Monday.
The three year tranche would be a revolving credit facility, while the five year would be a term loan, to be priced at 275 basis points over the London Interbank Offered Rate (Libor), one of the sources familiar with the matter said.
The funds are being raised to refinance a 2012 maturity, the source added.
Banks including Barclays, Standard Chartered, Emirates NBD and Credit Agricole, have been invited to participate in the loan, the sources said.
"It's a borrower-arranged financing, so it won't go to syndication. The pricing is very tight - logically, a deal like this wouldn't be underwritten and placed in the market because the pricing is so tight," one Gulf-based banker said.
MAF, the sole franchisee of French hypermarket chain Carrefour in the Gulf, recently concluded roadshows for a potential five year bond issue but decided to put plans on hold due to pricing considerations.
The sources said the loan will not replace plans for a bond issue. The company recently established a $2 billion medium term notes programme.
"The loan would be an alternative to (getting immediate funding) rather than a substitute for issuing a bond. The reality is they have spent a lot of money establishing a programme, they wouldn't decide against issuing a bond."
"I think they are definitely looking to visit the bond market in Q3 or Q4," said one of the sources.