OMV AG, the biggest central European energy company, is seeking a 1.5 billion-euro ($2.1 billion) credit line to refinance an existing loan as borrowing costs decline, according to three people with knowledge of the transaction.
The Austrian company has hired banks to arrange a five-year revolving credit facility with an interest margin of 27.5 basis points, or 0.275 percentage points, more than the euro interbank offered rate, said the people, who asked not to be identified because the terms are private. The deal will replace a 1.5 billion-euro credit line due April 2015 on which it paid an initial 75 basis-point margin, data compiled by Bloomberg show.
Robert Lechner, a spokesman for Vienna-based OMV, declined to comment on the financing.
OMV joins Daimler AG and E.ON SE in refinancing debt to capitalize on cheaper rates as lenders compete for deals. The average margin on investment-grade credit lines fell to 59 basis points this year from 107 basis points in 2012, according to data compiled by Bloomberg. The volume of revolving loans replacing existing debt rose to 83 billion euros, surpassing 64 billion euros for all of last year.
Daimler obtained a 9 billion-euro credit line last month while E.ON, Germany’s largest utility, is marketing a 5 billion-euro loan, Bloomberg data show.
Barclays Plc, ING Groep NV and UniCredit SpA are arranging OMV’s new facility, which has two one-year extension options, said the people. Lenders will impose a fee if the credit line is drawn, which will rise to 30 basis points if two-thirds is utilized, they said.
A revolving credit facility is a type of debt where money repaid can be borrowed again.
OMV is rated A3 at Moody’s Investors Service and an equivalent A- at Fitch Ratings, the same level as E.ON and Daimler, Bloomberg data show.