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Rlpc edf and air liquide look to amend loans

Oct 30 French utility EDF and French industrial gases firm Air Liquide are seeking to amend and extend existing syndicated loans to reduce pricing and extend maturities, banking sources said. EDF did not immediately comment. Air Liquide declined to comment. The companies are looking to take advantage of current high levels of loan market liquidity and competition between banks to lower pricing, while avoiding the cost of a full refinancing, the sources said. A+/Aa3 rated EDF is looking to cut pricing on its existing 4 billion euro ($5.51 billion) deal, which was arranged in November 2010, targeting 20 basis points (bps) over Euribor from the current level of 35 bps.

The company is also looking to extend the financing by five years and also instate two one-year extension options, one of the sources said. The financing also pays utilisation fees starting at 7.5 bps for initial drawdown, rising to 30 bps for drawings of over two thirds.

Existing lenders are offered an amendment fee of 10 bps, while new lenders are offered a 20 bps fee to join the financing. Meanwhile, A rated Air Liquide is looking to amend and extend its existing 1 billion euro facility that was originally arranged in November 2011.

That loan, which was for five-years plus two one-year extension options, paid an initial margin of 45 bps with a first draw utilisation fee of 15 bps for drawings up to one third, 30 bps for drawings over one third and 50 bps for drawings over two-thirds. The first extension option was applied in October 2012. Last week, BBB-/Baa3 rated French drinks maker Pernod Ricard successfully completed an amend and extend on a 2.5 billion euro credit facility, reducing pricing by 20 bps and extending the existing maturity maturity of the deal by one year to 2018. ($1 = 0.7262 euros)

Rlpc russian oil giants face loan liquidity squeeze bankers

Requests by oil giants Rosneft and TNK-BP for syndicated loans with a combined total of $1.5 billion have prompted concerns among lenders as to whether enough liquidity can be raised, as many anticipate aggressively-priced deals. Russia's largest crude producer, Rosneft, is approaching the market for between $800 million and $1 billion, coming only three months after agreeing a $2.16 billion loan -- the largest deal for a Russian borrower in 2012. The firm also signed a $2 billion deal in early December 2011, which means it has squeezed $4.16 billion out of international lenders in seven months."Nobody is sure what appetite there is left is out there for Rosneft, as there is a lot of overhang," a banker said. The crude producer will most likely have to adopt a secured structure, having agreed the two unsecured loans since December 2011."I think this will be the point that we tip towards a secured deal," the banker added. Meanwhile, the country's third largest oil company, TNK-BP, is eyeing a $500 million, three-year loan at a time when the company's ownership is under question. BP, which bought its stake in TNK-BP in 2003 for $8 billion to team up with Alfa-Access-Renova, said on June 1 it had received multiple offers to sell its holding, amid flaring shareholder conflict.

A Russia-based banker questioned whether there would be enough liquidity credit availability to cater to both Rosneft and TNK-BP in the market simultaneously. TNK-BP had initially planned to undercut the 300 bps all-in that Rosneft had secured on its $2.16 billion deal in April. However, that scenario is unlikely given the borrower's ownership ambiguity and the ongoing pressure on international lenders from the eurozone debt crisis, bankers said, adding that 325 bps-350 bps was more realistic."I may get brownie points with TNK-BP management (to accept lower pricing), but will that be a benefit to me when the management moves on shortly?" a second banker said.

The lending pool and final deal size will be defined by a handful of factors, with one being which international lenders are able to put down large US dollar tickets, as TNK-BP is unlikely to include a euro tranche."Also, will TNK-BP really stick to the $500 million, or will they accept whatever they can raise from the market? To what extent are there conflicted banks, such as banks already advising them on the stake sale, for example?" a third banker said. TNK-BP's pending share issue is also proving challenging: "Nobody actually knows exactly where to price TNK-BP," a Russia-based banker said. Russian volume in the first quarter of 2012 plummeted to $9.75 billion, marking the lowest first-half total since 2009, according to Thomson Reuters LPC. Robust local liquidity and several cash-rich borrowers are gradually pushing international lenders out of vogue.

OIL WATCH Fluctuating oil prices -- which hovered around $99 a barrel on July 10 -- could put pressure on some Russian borrowers to tap international lenders in the coming months, since many firms operating in the world's second largest oil producer put their lowest-estimate guidance at $90 a barrel, bankers said. More downward pressure on oil prices is expected, as concerns spread about the health of the US economy."If oil goes below this level then the companies will have to reassess their positions," the Russia-based banker added."Dividend payments are also coming - companies will need money."Commodity borrowers' preference for US dollars -- the currency for global oil trade -- means that the powerful liquidity of the local rouble market could be less significant. The potential impact of a bearish oil market -- Russia's economic backbone -- on the loan market will last several months as companies digest their budgeting process, bankers said.

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