Majid Al Futtaim Holding LLC, the operator of Carrefour SA stores in the Middle East, is raising more than $1.5 billion from a revolving credit facility to replace a loan, according to a banker familiar with the plan.
The Dubai-based company, which postponed the sale of perpetual bonds in June, is raising the five-year loan in dollars and dirhams, said the banker, who asked not to be identified because the information isn’t public yet. The debt is priced at around 200 basis points, or 2 percentage points, above the London interbank offered rate and the unused portion will also carry a commitment fee, the banker said. About 15 banks expected to participate in the loan, he said.
The operator of Dubai’s Mall of the Emirates, which boasts an indoor ski slope, raised $1 billion from a three-year revolving credit facility and a five-year term loan in July 2011. Twelve banks participated in that facility including Barclays Plc, Credit Agricole SA, Emirates NBD PJSC and Standard Chartered Plc. The three-year facility paid a margin of 250 basis points and the five-year loan of 275 basis points, two people familiar with the deal said at the time.
Majid al Futtaim is returning to the debt market after Dubai companies, including Dubai Duty Free, reduced the pricing on their loans. The cost to protect the emirate’s debt from default has dropped more than 100 basis points from July 2011 to 230 yesterday, according to data from CMA, as several debt laden state-owned companies repaid or restructured loans.
A spokesman for Majid Al Futtaim, who asked not to be identified because of company policy, declined to comment.
Majid Al Futtaim said this year it plans to invest 3 billion dirhams ($817 million) in Dubai projects and may buy part of Spinneys supermarket chain in the Middle East. The company delayed the June bond sale after global yields rose on expectations the U.S. Federal Reserve will reduce bond buying.
The yield on the company’s 5.25 percent $500 million of bonds due July 2019 was little changed at 4.85 percent at 3:46 p.m. in Dubai. The yield has dropped three basis points over the last year.
In a revolving credit facility money repaid can be borrowed again.