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A US$550mn refinancing of Abu Dhabi’s first independent power and water project, Taweelah A2, has closed. The 16.5-year facility is split into two tranches: a US$400mn club tranche paying a margin of 95bp over Libor with a step-up to 130bp over the course of the loan, and a US$150mn Islamic tranche.

Mandated lead arrangers on the US$400mn tranche are Arab Banking Corporation, Abu Dhabi Investment Company, ANZ, Barclays, BayernLB, HSBC, National Bank of Abu Dhabi, National Bank of Kuwait, NordLB, SG and Union National Bank.

The facility includes a clause that will allow banks, with the assistance of the borrower, to securitise their participations into limited-recourse project bonds to be issued by special purpose companies without requiring the consent of the borrower, its sponsors or any other bank.

The first Taweelah A2 project bond is expected to be a US$135mn project bond issue to be sponsored by the National Bank of Abu Dhabi.

The Islamic tranche, structured as an ijara, which was arranged by Abu Dhabi Islamic Bank, permits the ijara participations to be securitised into sharia-compliant sukuks on the same basis as that applying to the commercial banks’ rights to securitise their participations into project bonds.

The project became commercially operational in October 2002 and has a capacity of 710MW and processes 50mn gallons of water a day.