Petronas launches US dollar fundraising

Malaysian oil giant makes a rare foray into the loan market.

Petroliam Nasional Bhd is tapping the market for a $267 million dual tranche facility to refinance its existing debts. The deal was launched into general syndication late on Tuesday night by arrangers Barclays Capital and Dresdner Kleinwort Wasserstein.

Banks have been sent invitations offering three commitment levels with the top tier title of lead arranger available for tickets of $25 million. The financing is split between a $162.5 million four year portion priced at 35.9bp all-in for an average life of 2.03 years and a $94.5 million six year tranche paying 48.2bp for 3.43 years.

Many bankers have been looking forward to getting a good look at this credit as it is a rare visitor to the market under its own name, despite its participation in many projects - including the current Idku LNG Plant Project in Egypt. Furthermore the relatively short tenors, at just four and six years, are far below what the borrower has asked for before and this will enhance the value of the deal.

Some loan syndicators expressed dismay at the pricing as they hoped it would be a little wider but the general consensus was that the arrangers had got it more or less right. Market observers suggest that the deal was priced in line with the market and with its previous transaction from 2000 - a $323.2 million seven and nine year fundraising. That facility was also arranged by Barclays and Dresdner, along with Chase Manhattan Asia, and Dealogic figures show that it paid an all-in of just over 71.31bp for a blended average life of 5.1 years. Market support for the deal was enthusiastic with the arrangers receiving commitments totalling over $700 million, although the final amount was not increased.

For comparable transactions bankers point to the Government of Malaysia's $368m equivalent fundraising that was signed in March which provided the benchmark for this deal to be priced against. That financing paid 44.4bp all-in for an average life of four and a half years - slightly tighter than the pricing on this facility.

Malaysian loan volumes have been steadily increasing since the Asian financial crisis, although this years $4.35bn from 24 deals is still a long way off the $6.2bn raised in 2000. Many of the transactions that come to the market are small scale and aside from a handful of high quality credits, such as Petronas, there are few facilities that will create enough interest for offshore banks to get involved. Malaysian Shipping Corp has provided the largest two loans of the year with a $820m JBIC sponsored ship financing facility and the $830m bridge to fund the acquisition of American Eagle Tankers.

Other heavyweights who have entered the fray this year include Telekom Malaysia with a $360m financing in June. These deals were all structured as quiet club deals with very little syndication taking place.

This financing will allow offshore banks to book Malaysian assets at a respectable price in a publicly syndicated loan. Analysts suggest that this rarity value - in both the borrowers name itself and the Malaysian country risk - will encourage bankers to participate in the deal.

In addition the transaction has been priced at a level that banks are comfortable with and the appetite for the credit will be strong, despite the tight response deadline of October 22.