Abu Dhabi National Energy Co (Taqa) is seeking to raise a $3.5bn loan with a five-year duration, Reuters has reported.
Taqa is said to be working with Bank of Tokyo-Mitsubishi and National Bank of Abu Dhabi and has invited other banks to join, according to sources quoted in the report.
Lenders have until the end of the month to submit pledges, with the possibility for a syndication at a later stage, which will aim to attract additional lenders, depending on the response from the initial invited group, one of the sources said.
Taqa’s decision to seek a five-year loan has been seen as a move to take advantage of strong liquidity of local banks to try to lower borrowing costs.
Since the beginning of the year a number of companies operating in the Gulf have secured financing from regional and international banks, including Saudi Arabian oil giant Aramco, which signed a $10bn credit facility in March.
Taqa is expected to use the cash to consolidate a number of existing debts into one facility with a lower rate of interest.
The company could refinance a $2.2bn existing loan which is due to mature in December or it could set cash aside for a $1bn bond ahead of its maturity in October 2016, a source told Reuters.
“They could refinance the loan and bond and still have a little bit of cash left over to put into the business,” the source added.
