Masherq raises 500 mn$ loan

Mashreq bank, the fifth largest bank in the UAE by market capital, has raised a $500 million loan facility from international investors. The lender intends to use the extra cash to refinance a $250 million five-year term loan taken in December 2005, as well as for general expansion. Fund raising began on June 8, at the beginning of the downturn of global credit markets, and was so oversubscribed Mashreq elected to increase the facility by $100 million. The bank initially sought to raise $400 million.

A senior banker who worked closely on the deal told Arabian Business that 29 banks in the US, Europe and Asia participated in the syndicated loan. The offer was shopped around to regional investors but received little interest given the tight margins on the yield. International investors were said to be more excited about the loan because Mashreq has high quality ratings, good performance and a solid balance sheet. Based on high ratings from agencies Moody's and Standard & Poor's, the five year loan is set at a tight 0.25% over London Inter-Bank Offer Rate (LIBOR) - the interest rate that banks charge each other for loans. The previous $250 million loan was set at 0.30% over LIBOR.The crunch in global credit markets did not stymie demand for the loan. The senior banker, added: "We didn't face any problems." Source