Commercial Bank of Dubai closes in on up to $500 mln loan

 23 Jun 2016 - 14:36

Commercial Bank of Dubai closes in on up to $500 mln loan
 


DUBAI: Commercial Bank of Dubai (CBD) is expected to sign a three-year loan in the next few days worth up to $500 million to refinance existing debt, sources familiar with the matter told Reuters on Thursday.

Gulf banks are keen to raise funds as liquidity comes under pressure from lower oil prices and before possible further hikes in borrowing costs later in the year if the U.S. Federal Reserve raises interest rates again.

Dubai's largest bank, Emirates NBD, was due to sign a three-year loan of as much as $1.5 billion this week.

Eight to 10 banks are providing the CBD loan including Citigroup, National Bank of Abu Dhabi, Commerzbank and Standard Chartered, two of the sources said. Commerzbank was coordinating the loan, they said.

The loan carried all-in pricing, which is inclusive of margin and fees, of 155 basis points over the London interbank offered rate (Libor), the sources said.

Two of the sources said CBD was looking for $500 million but might have to settle for $450 million if it could not get sufficient uptake.

CBD declined to comment.

The money is being raised to refinance a $450 million loan that matures in December, the sources added. That three-year facility had pricing of 125 bps over Libor, according to Thomson Reuters data.

Borrowing costs have risen in recent months as investors price regional debt higher because of concerns about the impact of lower oil prices on liquidity levels.

Reuters