Malaysia, Saudi Aramco venture seeks $9.7bn loan

Petronas and Aramco have equal stakes in the $27bn complex



Malaysia’s Refinery and Petrochemical Integrated Development (RAPID) project, a venture between Petronas and Saudi Aramco, is seeking commitments from banks for a $9.7bn, 15-year loan, sources told LPC, a fixed income news service.

Banks have already responded to an initial request for proposals and are required to respond by the end of this week with revised proposals, mainly around pricing.

The new borrowing comprises three tranches: an export credit agency facility, an ECA-covered portion and an uncovered commercial piece of around $3.08bn. ECAs from Japan, South Korean and Europe are expected to be involved.

The uncovered commercial tranche will carry different interest margins tied to completion of the project. The pre-completion period is expected to be two years, during which Petronas and Aramco will provide guarantees, and the all-in pricing is likely to be around 80 basis points over the London Interbank Offered Rate, LPC reported.

After the project is completed, guarantees fall away and the pricing will increase to around 150 bps.

An $8bn, 364-day bridge loan which RAPID completed in March paid similar all-in pricing based on an initial razor-thin interest margin of 40 bps over Libor and fees. The bridge attracted 19 banks.

Refinery operations are set to begin in 2019, with petrochemical operations to follow six to 12 months later.

Read: Saudi Aramco finalises refinery deal with Malaysia’s Petronas

Petronas and Aramco have equal stakes in the half-built, $27bn complex located between the Malacca Strait and the South China Sea. Aramco has agreed to supply at least 50 per cent of the crude oil for the project.