Mubadala Development Co., a state-owned Abu Dhabi investment company, plans to pay 45 basis points above the benchmark rate on a $2 billion credit facility it’s raising, according to two bankers familiar with the plan.
Interest on the three-year revolving loan may rise up to 75 basis points, or 0.75 percentage point, over the London Interbank Offered Rate depending on the amount drawn, said the bankers, who asked not to be identified because the information is private. The money will be used to refinance an existing $2.5 billion three-year facility that expires in April, they said.
Mubadala, rated AA at Standard & Poor’s and Fitch Ratings, has asked banks to propose better terms than the 75 basis-point margin it pays on the existing loan, Kelly Thomson, Mubadala’s head of structured finance, said Feb. 5. Revolving credit loans allow borrowers to tap and repay funds multiple times.
“Mubadala is currently in discussions with a number of banks regarding the renewal of our corporate revolving credit facility,” the company said in an e-mailed response to questions from Bloomberg.
Mubadala, which has investments ranging from microchips to aerospace, is controlled by the government of Abu Dhabi, the capital of the United Arab Emirates and holder of 6 percent of the world’s proven oil reserves.
U.A.E borrowing costs have dropped over the past year as the economy recovers following a real estate crash that was triggered by the 2008 global credit crisis. Abu Dhabi’s five-year credit default swaps were 68 basis points yesterday, down from 116 a year earlier, according to CMA, which is owned by McGraw-Hill Co. and compiles prices quoted by dealers in the privately negotiated market.