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AD Ports Group inked agreements with two UAE banks to refinance its USD 2.25 bn syndicated loan, according to an ADX disclosure (pdf). The new terms are expected to shave off up to USD 12 mn (AED 44 mn) in finance costs over the next year.
The agreement swaps out the USD 2.25 bn loan for two new facilities: a USD 2.5 bn (AED 9.2 bn) medium-term bond with a 2.5-year maturity, as well as a USD 273 mn (AED 1.0 bn) short-term bond with a 1.5-year tenor.
Background: The company had secured the multi-currency facility last year, with an initial tenor of up to 2.5 years. First Abu Dhabi Bank and Citigroup were the coordinators and bookrunners on the facility, which saw participation from 13 banks.
The move comes as Fed kicked off its interest rate easing cycle last Wednesday: The Central Bank of the UAE followed in the US Federal Reserve’s footsteps last week and cut the overnight deposit rate by 50 basis points, from 5.40% to 4.90%, while leaving the interest rate applicable to borrowing short-term liquidity at 50 basis points above the base rate. The move to refinance the debt allows AD Ports to “optimally take advantage of the easing interest rates cycle” and secure longer tenors at more competitive rates, the company said.
The group aims to use bonds as its “predominant long-term funding vehicle,” capitalizing on their flexibility to strategically time returns to the debt capital markets, the disclosure reads.
The firm has a good credit rep: AD Ports is rated A+ and gcAAA by S&P, and AA- with a stable outlook by Fitch.
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