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10| pfi | Middle East Report 2009 IPIC

to raise US$1bn, was to be used to fund the purchase of its Oil Search stake. Deutsche Bank originally wanted to market the loan at banks in the Asia-Pacific region (minus Japanese banks) but also included Citigroup in its initial talks. However, the extremely tight credit markets in the region meant that there was no liquidity available and so it looked elsewhere to secure the funds. Ultimately, it attracted four banks: Abu Dhabi Commercial Bank, Caly- on, First Gulf Bank and Natixis, which were paid a mar- gin of 300bp. However, even as this facility was closing, there were rumblings in the market that indicated something else was going on. The first indications came as early as Feb- ruary, when IPIC began moves to refinance its €975m one- year club, due to mature in May. However, by the time it closed its Oil Search facility at the beginning of March, it was clear that something much bigger was happening; combining both the May refinancing and funding for acquisitions into a multi-billion dollar syndicated loan. Negotiations took place between the three co-ordina-

tors: BTMU, HSBC and Santander, throughout March and April, with chatter growing in the market about what was building. Talks also took place with a number of other banks, mostly international but also a couple of locals, about putting together a top group to fund the facility, with talk of commitments in the region of US$500m. In mid-April, a figure appeared in the press that proved to be true: IPIC was looking for US$5bn. The deal was due to be officially unveiled to the mar- ket in the middle of May. As well as refinancing the one- year loan, it is expected to repay US$1.8bn of bridge loans used to buy the Aabar convertible and provide funding towards the Nova Chemicals and Cepsa acquisitions. It

is expected to be syndicated, with a financial close pre- dicted for towards the end of June.

What will help IPIC’s fundraising cause is the credit ratings that it received.

What will help IPIC's fundraising cause is the credit rat- ings that it received from Fitch Ratings (AA), Moody's (Aa2) and Standard & Poor's (AA) at the end of April. Not only will it help secure banks on its loan deal but it will also allow it to tap another funding stream: the bond market. While IPIC has admitted that getting a credit rating will help it tap the bond market in future, it insists it has no current plans to do so. However, even before the credit rating was revealed, reports that IPIC was lining up a bond issue for when the loan had cleared the bank market had begun to surface. Further fundraising would need to be on the cards, according to Moody's, as IPIC needs US$6.1bn of finance over the coming months.

Such a switch towards relying on the loan and bond markets shows the shift that IPIC has made to allow it to grow at such an ambitious rate. While the Abu Dhabi gov- ernment will continue to provide capital to IPIC, it has now made the break from solely relying on the author- ities for its finance. However, because of the growth that Abu Dhabi has already achieved, and the continued growth that IPIC is now an integral part of, access to such funding shouldn't be a problem. The fact that it is putting together a US$5bn loan at a time when credit markets are still suffering shows not only the scale of its ambition but the level of respect that both IPIC and Abu Dhabi now command on the world stage.

Therefore, at a time when distressed valuations provide a unique opportunity for those with the capital at their disposal, IPIC is grasping it with both hands and is becoming a major force in both Abu Dhabi and the wider world.

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PLUS Middle East




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Hybrid deals for Canadian P3 New French PPP legislation

pfı 1 October 2008 Issue 394

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