Abu Dhabi’s Mubadala said on Thursday it has signed a $2 billion revolving credit facility to refinance a $1.75 billion revolving loan it put in place three years ago.
The transaction is a rare loan deal in Gulf debt markets, where borrowers are increasingly issuing bonds to diversify their funding base and, more recently, to take advantage of favorable conditions across emerging markets.
The state investment fund signed the original loan in 2016 with a group of 21 international banks. A revolving loan is one that can be drawn, repaid and drawn again during the agreed lending period.
Reuters reported on Wednesday that Mubadala was arranging the $2 billion credit facility. The new loan will have a five-year maturity and be provided by a large group of relationship banks, two sources told Reuters.
“In line with our prudent liquidity management strategy, Mubadala can confirm that it has signed a new $2 billion revolving credit facility,” a Mubadala spokesperson said in an emailed statement to Reuters.
The loan “will be used for general corporate purposes and will replace the $1.75 billion Mubadala Development Company, and legacy IPIC revolving credit facilities.”
Abu Dhabi merged Mubadala with International Petroleum Investment Co (IPIC) two years ago. One source familiar with the loan discussions told Reuters in November that the credit facility could be increased in size to include IPIC’s debt requirements.
Bonds have accounted for almost 70 percent of the debt raised in Gulf capital markets this year, Franklin Templeton said in a presentation on Wednesday.
Abu Dhabi’s Mubadala signs $2 bln revolving loan