Saudi Arabia looks to refinance $10bn syndicated loan, say sources

HSBC, JPMorgan and Mitsubishi UFJ Financial Group are claimed to be working on the refinancing



Saudi Arabia is working with HSBC, JPMorgan and Mitsubishi UFJ Financial Group on the refinancing of its existing $10bn syndicated loan, said banking sources familiar with the matter.

The three lenders have a leading role in the refinancing, which will involve a much larger group of banks. Loan syndication is expected to be completed by mid-February, said the sources.

A spokesman for the Saudi debt management office said: “The DMO is coordinating this transaction directly with all financial institutions and it would be inappropriate to comment further whilst discussions are still ongoing.”

HSBC and JPMorgan declined to comment, while MUFG did not immediately respond to a request for comment.

Saudi Arabia approached banks last month with requests for proposals to refinance its $10bn loan, and also for further US dollar-denominated bond issuance and potential financing backed by foreign export credit agencies.

The loan refinancing will include a repricing of the debt facility and a maturity extension, to 2023 from 2021. It will include an Islamic finance tranche using a murabaha structure, according to a DMO statement last month.

The sources said the size of the loan refinancing had not been determined yet and would depend on how much Saudi Arabia planned to raise in each of the fund-raising exercises on which it was working, including its international bond issuance and domestic sales of local currency sukuk.

Other banks potentially participating in the loan deal will likely include European, American and Japanese banks, said the sources.

Saudi Arabia raised the syndicated loan facility in 2016, in what was its first jumbo debt transaction after a slump in international oil prices. That deal opened the way to a $17.5bn bond issue later that year, which was the largest bond ever sold by an emerging market issuer.

Since then, Saudi Arabia has borrowed extensively, both locally and internationally, through conventional and Islamic debt instruments. A new US dollar-denominated bond deal could be marketed over the next few weeks, banking sources said.

Fahad al-Saif, president of the DMO, said last month that the requests for proposals sent to banks were “another step in realising our ambition to establish a prominent position in international debt markets as part of Vision 2030”.

The Vision 2030 economic reform plan aims to move the Saudi economy away from oil dependence and towards the private sector.