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Rlpc dubai loans lean on local banks

´╗┐Dubai's loan market has entered a new phase in its post crisis recovery, underpinned by a liquid local bank market, which is helping to fill the void left by European lenders still reeling from the emirate's financial meltdown in 2008. Island resort Atlantis, The Palm is in the market with an $800 million refinancing, and luxury hotel chain Jumeirah Group is out with a six-year $1.4 billion loan, while fund Investment Corporation of Dubai has closed a $2 billion deal. The Arab Spring has resulted in an inflow of money into the region, which is now seen as a relative safe haven, and Dubai's borrowers - many of whom were previously mired in the restructuring of their large conglomerate parent companies - are making the first cautious steps for new money and new investors. Pushed out at the height of the bubble in 2007-2008 by the inflow of cheaper international money into the region from the so-called 'suitcase bankers', liquid local banks are now helping to drive the recovery."Regional banks have been well capitalised since the 2009 crisis. Now they are not just participating in big tickets but becoming an important part of the deal structure," said Simon Meldrum, director, CEEMEA loan syndicate at RBS. According to Thomson Reuters LPC's UAE bookrunner league tables, local banks did not feature in the top ten in 2007, which consisted of eight European banks and two US banks. The switch to local banks is illustrated by Abu Dhabi Commercial Bank, which ranked number 22 in the table that year, having led just one deal, but which is a lead bank on all three new Dubai loans. ADCB is leading the Jumeirah deal, alongside HSBC and Standard Chartered Bank, and is also a mandated lead arranger on ICD alongside Citigroup, Commercial Bank of Dubai, Emirates NBD and HSBC on the conventional part of the deal. Abu Dhabi Islamic Bank, Dubai Islamic Bank and Standard Chartered are lead arrangers on an Islamic facility.

ADCB is leading the Atlantis deal with National Bank of Abu Dhabi, Commercial Bank of Dubai and Union National Bank, alongside Barclays and HSBC. STILL STUNG While local banks, long-term regional stalwarts such as HSBC and Standard Chartered Bank, and US lenders are enthusiastic lenders to Dubai's borrowers, European banks that were caught up in the emirate's crisis are more cautious.

"If you take the slope to no activity, European banks are near the bottom of that," said a London-based European banker. "There is absolutely no chance some of these banks will be looking to do deals in the region. They all piled into the market in 2007 and it is quite common to see European banks still stuck with a $500 million -$1 billion exposure to a single counterparty."Another European banker said: "A number of deals we did at the height of the market have had to be restructured or are being restructured: this is still a painful exposure for us; we will not be doing deals there in the near future."US banks have fared better, taking a more measured and long-term approach to the region, according to bankers. Only two US banks - Citigroup and Morgan Stanley - appeared in the top ten bookrunners for 2007, but are expected to help to fill the void left by the retrenched Europeans."Many of the US banks have been long-term players in the region," said the London-based European banker. "Pre and now post crisis they have regularly been touted as lead banks."

The appeal of bank balance sheets supported by the locally based wealth management units of these US banks is attractive for wealthy families and local businesses looking for dollar funding."Dollar funding is key to financing and these banks are willing and able to step up and give large commitments to these deals," said a second London-based banker. LOCAL ATTRACTION As part of Dubai Holding, which is still in the process of a long-term restructuring, Jumeirah remains potentially sticky for international lenders. However, there is plenty of appetite from local banks and as a result the borrower has managed to secure an aggressive margin of 275bp over Libor. In comparison, Atlantis, The Palm's refinancing, which is looking to attract international as well as local banks, is priced at 500 bps over Libor."The Atlantis deal is priced to attract some new-money investors to the financing, and also reflects in part the risk of the single asset lending," said the first London-based loans banker. "Jumeirah is a punchier price. It is much more of a corporate relationship play on pricing: it is not priced to attract much, if any, new money or investors."

Rlpc liquidity boost puts big loans back on european agenda

´╗┐Jan 17 The abundance of liquidity in the European leveraged loan market has restored its capacity to finance bigger deals, prompting sponsors to consider pure European financings to back potential M&A deals, including French broadcasting masts operator TDF's domestic business. Liquidity has been boosted by a lack of M&A last year, a number of repayments and the emergence of new CLOs and credit funds. Private equity firm Dering Capital is in advanced talks to buy TDF as the last remaining bidder in the sale process and is approaching a number of banks to see what financing can be put in place to back an acquisition. The sale would require over 2 billion euros ($2.71 billion) of debt and Dering is seeking to fund the potential buyout with debt denominated solely in euros, structured as all-senior leveraged loans or senior and subordinated debt. The loan could be a similar size to last year's 2.3 billion euro financing backing CVC's acquisition of a majority stake in German energy metering firm Ista, which was the largest pure European buyout loan since 2007, according to Thomson Reuters LPC data."A lot of money has been raised in new CLOs, managed accounts that have come to Europe and international funds that have European baskets, which means that although it isn't pure European money, it is denominated in euros. There is an awful lot of liquidity to do pure European leveraged financings and people wouldn't blink at raising 3 billion euros of loans for one deal," a syndicate head said.

Bankers are also preparing leveraged loans of up to 700 million euros for the planned sale of a minority stake in veterinary pharmaceutical firm Ceva Sante Animale. Ceva's management held presentations with a large number of banks last week to talk through potential debt packages. The company wants an all-euro covenant-lite financing consisting of senior loans and a preplaced subordinated loan. With so much liquidity in the market, loan terms are getting more aggressive and it is only a matter of time before the first pure European covenant-lite loan launches.

Nevertheless, some banks remain cautious and will want to make sure they have a safety net and are likely to push for flex in documents to allow them to raise dollar financing if necessary."On a very large deal it is preferable to have flex language to go to the dollar market because it is deeper and more liquid. A lot of times, bankers will want that flexibility," the syndicate head said.

PRICING PRESSURE An overwhelming amount of liquidity is also pushing pricing tighter in Europe. On Friday, pricing emerged on a loan financing backing Hellman & Friedman's acquisition of a 70 percent stake in Deutsche Telekom's classified advertising business Scout24. A 645 million euro seven-year Term Loan B will pay 425bp-450bp and is offered with a 99.5 OID, while a 50 million euro six-year revolver will pay 425bp. The financing also comprises a 50 million euro eight-year second-lien tranche, which was preplaced with Macquarie."Scout 24 could even flex down to 400bp. At the moment, 400bp to 425bp is the market," an investor said. That represents a fall of 25bp-50bp from a year ago, when the average Term Loan B margin was 450bp, Thomson Reuters LPC data shows. ($1 = 0.7376 euros)