DIFC seeking better terms for $350mn loan

BETTER TERMS: DIFC Investments is looking for better terms for a $350 million loan. (Getty Images)

The investment arm of the Dubai International Financial Centre (DIFC) is seeking better terms for a secured $350 million syndicated loan after original pricing was deemed "lavish", an official said on Monday.

DIFC Investments had signed a $500 million loan in March 2008, maturing on Dec. 4, to back its acquisition of the UK's SmartStream Technologies Group.

Goldman Sachs launched syndication of the $350 million, one-year loan last week, with proceeds to be used for general corporate purposes.

The deal paid a margin of 400 basis points, up from 75 basis points paid by the borrower in March.

"We feel the pricing of such a transaction should be much better," DIFC Investments managing director Bisher Barazi told newswire Reuters on Tuesday.

"Technically, we lowered the spread to 250 basis points all in and we removed any security elements, so it will be unsecured, and we will see the market appetite for that."

DIFC Investments, which has a 2.2 percent stake in Deutsche Bank, felt it had access to cheaper liquidity and made the decision to withdraw it from syndication, bankers told Reuters Loan Pricing Corp. on Monday.

"We decided that we have sufficient internal resources to meet that instead of spending lavishly," Barazi said.

"Unless there is appetite for the new rate we will close it. We are under no pressure and will end up repaying the $500 million for SmartStream and staying in the market to see what happens," he said.

Dubai government-owned entities, known collectively as Dubai Inc., have raised $32.7 billion of loans this year, according to RLPC data, but the loan market has been closed to them since the collapse of US investment bank Lehman Brothers.

Dubai's sovereign debt stands at $10 billion while the debts of state-affiliated firms amount to $70 billion.

Mohamed Alabbar, chair of Dubai's new financial crisis committee, said on Monday the Gulf Arab trade and tourism hub was cutting expenditure and consolidating activities in the face of the global crisis. He said that the Dubai government was ready to step in to help state-affiliated companies if needed. (Reuters)

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