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Fri 19 Jun 2009 10:08 AM

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Abu Dhabi IPIC's loan attracting good response - bankers

$3.5bn loan to be used to finance recent buyouts; general corporate purposes.

Abu Dhabi government-owned International Petroleum Investment Co has received a positive response to its $3.5bn syndicated loan, with up to eight banks looking to join the deal as bookrunners, banking sources close to the deal said on Wednesday.

The banks are looking to commit $400m each, the sources said, joining co-ordinating bookrunners Bank of Tokyo-Mitsubishi UFJ, HSBC and Santander.

The loan, which will be used to finance IPIC's recent acquisitions, as well as for general corporate purposes, was launched in May.

It is the first major new money loan in the Gulf this year, and is expected to serve as a barometer for the level of appetite amongst international banks for syndicated loans in the region, the sources said at the time.

The loan is split between a one-year bridge loan A that will be taken out by a bond, and a two-year facility B that is extendable for one year at the lenders' discretion.

The margin on the A loan is 250 basis points (bps) over LIBOR for the first six months, rising to 350 bps for the next three months and 400 bps thereafter. The margin on the B loan is 350 bps.

Around half of the $3.5bn loan will be taken out by the capital markets.

At the same time, National Bank of Abu Dhabi is arranging a separate $1.2bn-equivalent dirham deal for IPIC to local banks, which will also be used for acquisition purposes. The margin on that deal is 250 bps and has also been received well by banks, one of the sources said.

Proceeds of the $3.5bn loan back IPIC's $500m takeover of Canada-based raw plastics manufacturer Nova Chemicals Corp, which was approved by shareholders in April, in a deal worth $2.3bn including Nova's debt.

The loan also funds the borrower's increased stake in Spanish oil company Cepsa. IPIC raised its stake in March to 47 percent by buying shares from Santander Group and Fenosa in a deal worth around $4.4 billion.

IPIC invests in oil-related projects for the government of Abu Dhabi, the capital of the United Arab Emirates, which is the world's third-largest oil exporter.

In April IPIC was assigned an 'AA' rating by Standard and Poor's and by Fitch, and a 'Aa2' rating by Moody's. (Reuters)

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