EBRD-backed Severstal deal issues mandates

Calyon, ING and RZB have been mandated as initial mandated lead arrangers to arrange a €350mn B tranche of a loan package Russian steel producer Severstal.

The total financing package features a 10-year € 150mn A loan provided by the European Bank for Reconstruction and Development (EBRD), and a seven-year amortising B loan of up to €350mn which is being syndicated out to international banks. EBRD will remain the lender on record and syndication has been launched.

The B loan pays a margin of Euribor plus 1.40% per year for the first five years, before rising to 1.60% per year.

Banks participating in the B loan also benefit from EBRD's preferred creditor status that mitigates some political risks, such as transfer and convertibility risk.

Severstal is Russia's largest vertically integrated producers of flat steel products, and accounts for around 16% of Russian steel production and supplies 19% of the domestic market's needs.