Mubadala in $2.5bn debt refinance offer

Abu Dhabi Government-owned Mubadala Development Company has invited banks to participate in a self-arranged $2.5 billion (Dh9.1bn), three-year club loan to refinance existing debt, banking sources close to the deal said. Pricing on the revolving credit will not be set until the end of March, but the borrower is looking for a consensus from lenders, the bankers added. Pricing is expected to be aggressive, and will be a long way inside the cost of insuring Abu Dhabi debt for five years, the bankers said. Abu Dhabi's five-year credit default swap (CDS) level was 110 basis points on Thursday. "The borrower expects pricing to be seen in the context of large European corporates, despite the fact they are based in the Middle East," one of the bankers said. As previously reported, Mubadala has been in talks to refinance and increase its $2bn syndicated loan that matures in April. Mubadala will be the second government-linked company to tap the loan market this year, following International Petroleum Investment Company's $2.5bn, three-year term loan that launched at the beginning of March. Mubadala offers comfort to lenders with its 100 per cent government ownership and will be able to call on its close relationship banking group to agree a new deal, said bankers. There will be no explicit state guarantee for the new loan, however, one of the sources said.