NLMK set to close oversubscribed

Russian steel company Novolipetsk Steel's (NLMK) debut syndicated US$1.5bn loan is set to be oversubscribed, with syndication due to close over the next week. The initial mandated lead arrangers and co-ordinating banks are BNP Paribas and Société Générale

The facility is structured as a five-year amortising pre-export financing, paying a margin of 120 basis points. It is secured by an assignment of the full chain of commercial contracts from the company to the trader of NLMK group, and then on to a diversified pool of buyers.

Commitments are presently being finalised, and those working close to the deal say the facility will be oversubscribed by approximately US$200mn, with the deal set to close at US$1.7bn. There are said to be around 20 banks participating in the deal.

Senior syndication closed at the end of March, with a total of seven banks joining the facility before it was opened up to general syndication.

Joining as additional mandated lead arrangers and bookrunners were Deutsche Bank, SMBC, The Bank of Tokyo-Mitsubishi UFJ and UniCredit. ABN Amro and Fortis Bank also joined as mandated lead arrangers, while KBC Bank joined as a senior lead arranger.

Despite rocky conditions in the syndications market, NLMK has still attracted a wealth of banks, mainly due to the company's well-regarded profile. It is the fourth largest Russian steel producer, and has remained virtually debt free in recent years.

It is listed on the London Stock Exchange. In the first nine months of the financial year, the company recorded US$5.5bn in sales revenue and it had an EBITDA (earnings before interest, taxes, depreciation and amortisation) margin of 44% in 2006. It has a rating of BB+ (long-term issuer default rating) from Fitch Ratings and is rated Ba1 by Moody's rating agency.