Nine banks arranging $5bn Dubai World loan

State-owned investment group Dubai World is appointing nine banks to arrange a $5 billion syndicated term loan that will refinance the borrower's $5 billion, 364-day bridge loan signed last year, a banking source said on Tuesday.

Bank of Tokyo-Mitsubishi, Calyon, Deutsche Bank, Emirates Bank, HSBC, ING, Lloyds TSB, Mashreq Bank and Royal Bank of Scotland (RBS) are about to sign the mandate to arrange the deal, the banker added.

Syndication is expected to launch on Friday or next Monday.

The loan is likely to consist of a two-year tranche and a three-year tranche, worth $2 billion each, and a $1 billion, five-year tranche, a second banker said.

The original $5 billion loan backed the borrower's plan to buy into US casino operator MGM Mirage. It paid a margin of 85 basis points (bps) over Libor for the first six months, stepping up to 110 bps thereafter, which was regarded at the time as generous by the loan market.

Pricing on the new deal will be higher to reflect current market conditions, which have deteriorated since the original loan signed, and is expected to be 100 bps for the two-year tranche, 125 bps on the three-year and 150 bps on the five-year, a banker said. (Reuters)

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