The latest facility for Russia’s Lukoil is still out there, longer and cheaper than ever. Rather cleverly, the mandated lead arrangers Citibank and ABN Amro are taking advantage of the fact that a number of banks who consider themselves ‘big’ in Russia were left out of this mandate but still want to be seen playing with the mighty Lukoil at a very senior level. So sub-underwriters are being asked to hold all of the seven-year tranche they come in for. This lays off a very significant amount of the otherwise pretty illiquid seven-year risk that the mandated lead arrangers have, and restricts general syndication to the rather more liquid five-year tranche. The five-year tranche is priced at Libor+2% pa, seven years at Libor+2.5% pa. “Fees are pretty gruesome (more gruesome than pretty),” comments one banker. “The other striking feature about the deal is the two-year grace period, which makes it rather hard to characterise as ‘trade’,” adds the banker. “Neverthless the deal will probably sell like hot cakes, based on the strong credit profile of the borrower, but there may also be another factor. Overall, following the blow-out success of the Rosneft deal, most of the heavy hitters in the Russian market are just relieved that ABN Amro isn’t forcing them to swallow another ‘Lucille’ deal!”