The 22 year financing for the independent water and power plant (IWPP) is equally split between a commercial bank piece and a loan from Japan Bank for International Cooperation (JBIC).
The commercial loan seemed in jeopardy in July when lenders were pushing the sponsors — Abu Dhabi Water and Electricity Authority (ADWEA), GDF Suez and Japan’s Marubeni — to increase the starting, or pre-completion, margin from 260bp. The pricing had already risen from 225bp but banks were holding out for a further uptick of about 15bp-40bp.
However, the margin was kept at 260bp, a testament to the sponsors’ relationship pull and improving conditions across the loan market. “Banks got tired of fighting for 15bp — it ceased to be worth it,” said one banker close to the deal.
The commercial bank loan will replace a $900m bridge facility signed in January. The six banks that provided that loan — BayernLB, Calyon, KfW, Natixis, National Bank of Abu Dhabi and Standard Chartered — all committed to the latest deal. The other lenders were Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, HSBC, Mizuho, Samba, SMBC and Société Générale.
The margin steps up to between 270bp and 350bp once construction is completed. Banks were asked to commit $125m for fees of 325bp.
Shuweihat 2, which will cost $2.7bn, is Abu Dhabi’s eighth IWPP. Many more such plants are expected to be built — and financed with syndicated loans — across the region, given growing demand for power and water. Abu Dhabi alone expects electricity usage to triple by 2020.
ADWEA owns 60% of Shuweihat 2, while GDF Suez and Marubeni each hold a 20% stake. GDF Suez held 40% until selling half of it to Marubeni in June, a move which enticed JBIC and Japanese commercial banks to finance the project.
Shuweihat 2 will have a capacity of 1500MW and be able to desalinate 100m gallons of water a day.
