REUTERS

DUBAI/LONDON QATAR National Bank , the Gulf Arab state’s largest lender, has picked five banks to lead the syndication of a $1.5 billion loan refinancing, in a deal launched on Thursday, sources familiar with the matter said.

The three-year loan, which replaces a $1.85 billion facility set to mature on July 22, will be marketed by Bank of Tokyo-Mitsubishi UFJ, Deutsche Bank, HSBC, JP Morgan and Standard Chartered, four sources said.

The margin on the loan is 100 basis points over Libor, one of the sources said. The all-in pricing is said to be around the 115 bps mark, two of the sources said. All-in means the price includes both the interest rate attached to the loan and the fees which the banks will receive for taking part.

“QNB is the gatekeeper for Qatar so they can use this influence to negotiate the terms,” one of the sources said, adding that the pricing level was extremely tight and would make it prohibitive for all but a few international banks due to cost of funding considerations.

Sources said last month that QNB was looking to roll over part of the $1.85 billion maturity and had begun talks with banks. The sources said at the time that refinancing could prove tricky as QNB, rated A+ by Fitch Ratings and Standard & Poor’s and Aa3 by Moody’s and one of the largest banks in the Gulf Arab region, would have much lower funding costs than the banks it was approaching for finance.

The banks lending the money would have to take it as a loss-leader, the sources said at the time.

“They (QNB) are in a funny position as it’s an A+ rated bank raising money and for the majority of the syndicate, it’s likely to cost more than QNB is offering to raise the funds,” said one Londonbased banker.

“However, there is enough ancillary business going on around the bank to make it attractive to some banks.” Each of the five banks is initially committing $300 million to the transaction, two sources said, with the amounts scaled back once the syndication to other banks has taken place.

Most bank fundraisings in the Gulf this year have come in the bond market because regional financial institutions have tried to take advantage of historically low interest rates to diversify away from bank credit lines and secure longer-term funding.

QNB itself priced a $1 billion five-year bond in February.

QNB shares closed down 1.5 percent on Thursday, in a negative session on the Doha exchange QNB was not immediately available to comment.