Bahrain’s state oil company to refinance $1.6 billion loan

DUBAI, Feb 15 (Reuters) – Bahrain’s Oil & Gas Holding Company (nogaholding) has hired Gulf International Bank (GIB) and Mashreq (MASB.DU) to refinance an existing $1.6 billion murabaha facility, the company and banks said on Tuesday.

“The proposed transaction will have both Islamic and conventional tranches and will be sustainability linked,” nogahdling, GIB and Mashreq told Reuters in response to queries.

Nogaholding, which last year said it aimed to expand beyond oil and gas and look at the transition to greener energy, has previously raised funds in the debt capital markets, including a $600 million sukuk issuance in April. read more

International banks stayed away from the deal, and have also avoided a loan for Oman that is being arranged by seven regional banks, three sources close to the matter said.

Speaking on condition of anonymity because of the sensitivity of the issue, the sources said the credit risk versus the returns were keeping international banks away.

Bahrain and Oman have the weakest credit ratings in the region, but regional banks have rushed to fund government or government-linked deals that are perceived to have lower risk compared with similarly rated private issuers.

Pricing details were not immediately available for the nogaholding refinancing, but two of the sources said the seven-year Oman loan, which could be as high as $4 billion, had all-in pricing of about 250 basis points over LIBOR.

Oman’s finance ministry did not respond to an emailed request for comment. One of the sources said the pricing on the loan was inside Oman’s bond curve.

The loan is to refinance a $2.2 billion loan Oman took last year, which sources have said was likely to have had all-in pricing of between 375 and 390 bps over LIBOR and only a 15-month tenor with a 12-month extension option.

“There’s just excess liquidity – I mean banks are going crazy here in the region. Lots of aggressive behaviour, whether it’s pricing, whether it’s showing up with very, very large tickets on situations – almost looking to take on deals bilaterally, which would previously be a syndicated deal,” one of the sources said of the Gulf loans market.

Bahrain and Oman are the only two Gulf markets with sub-investment credit ratings, but in 2018 wealthier neighbours Saudi Arabia, Kuwait and the United Arab Emirates bailed out Bahrain with a $10 billion aid package to avert a credit crisis.

That allowed Bahrain to continue to access debt markets and bankers and analysts say they believe Gulf states would also intervene in Oman should the need arise.

Reporting by Yousef Saba and Saeed Azhar Editing by David Goodman and Barbara Lewis

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