Sonangol’s US$3bn eight-year syndicated facility has attracted DZ Bank to join as a mandated lead arranger, along with the initial mandated lead arrangers Standard Chartered, Natixis, Commerzbank, and Banco Espirito Santo (BES).
The deal has entered the general syndication phase, and commitments are due in by mid-October, with the signing scheduled for November.
However, the transaction has continued to receive mixed reactions in the market. The borrower is an established name in the market, with a good track record. It is one of the few sovereign oil companies still borrowing.
Yet, particularly given the current credit turmoil, many banks are put off from participating in a deal with a relatively low margin, and a tenor of eight years.
Potential participating banks also have to be comfortable with taking on Angolan risk. A market source remarks: “With regards to Sonangol, you hit the sovereign ceiling with Angola which is not rated but generally deemed to be CCC+/B- equivalent.”
In previous years, Sonangol has proved to be a popular borrower in the market with banks generally enthusiastic to participate in its syndicated financings. In 2006, Sonangol signed its landmark US$1.4bn loan facility through its joint venture with Sinopec (China Petrochemical Corporation). The funds acted as a borrowing base financing for Angola’s offshore Block 18.