Abu Dhabi power utility Shuweihat is raising $1.2 billion from a loan to refinance debt as it seeks to reduce costs and benefit from a drop in interest rates, according to two bankers familiar with the plan.
The 17-year loan is being raised for the Shuweihat S2 power and water unit and pays 1.75 percentage points to 2.25 percentage points above the benchmark London interbank offered rate, the bankers said, asking not to be identified because the information is private. Citigroup Inc., BNP Paribas SA, Standard Chartered Plc and Bank of Tokyo-Mitsubishi UFJ Ltd. are helping Abu Dhabi Water & Electricity Authority, the Persian Gulf emirate’s utility, raise the loan, they said.
Abu Dhabi National Energy Co., which holds a majority stake in Shuweihat, and its partners had obtained $2.7 billion in financing for the project in October 2009 at a margin of between 2.35 percent to 3.5 percent above the three-month Libor. They now seek to refinance that with the new loan and a planned bond sale this year, according to the bankers.
Average bond yields in the six-nation Gulf Cooperation Council, which includes the United Arab Emirates of which Abu Dhabi is the capital, plunged 139 basis points this year to 3.6 percent yesterday, the lowest since at least 2005, according to HSBC/Nasdaq Dubai’s GCC U.S. Dollar Sukuk/Bond Index.
State-controlled Abu Dhabi National Energy holds a 54 percent stake in Shuweihat, while GDF Suez owns 20 percent, Marubeni Corp. and Osaka Gas Co. 10 percent each, and Abu Dhabi Water 6 percent. Shuweihat 2 project, a natural-gas-fired facility capable of generating 1,510 megawatts of power and desalinated water, began operating in the first half of 2011.
Abu Dhabi National Energy and Abu Dhabi Water didn’t respond to phone calls seeking comment. Ramy Lawand, a spokesman for Standard Chartered in Dubai, declined to comment, while a spokesmen for Citigroup in Dubai couldn’t immediately comment. Spokesmen for BNP Paribas and Bank of Tokyo Mitsubishi couldn’t immediately be reached.