October 2007
The Bukhatir Group, a highly diversified business group in the UAE, has gone for a $200 million syndicated loan facility recently, according to banking sources.

The facility is probably the first syndicated deal the group has signed up at least in the recent past. Otherwise, almost all the deals have been bilateral. Sources said about 25 regional and international banks will be participating in the down-selling of the facility which has been underwritten solely by WestLB, the German state-run bank.

The facility has been priced at 125 basis points above Libor. Sources said the purpose of this facility is to re-finance the existing facilities and for other corporate finance needs.

Liquidity drying up
Though the pricing seems to be on the higher side, it cannot be said so given the present credit situation.

Banking sources recently told The Business Weekly that liquidity has been drying up for banks and they are forced to raise their rates.

"Big corporates were able to dictate their terms to banks until a few months ago when the US credit scene worsened. But things have changed now, the liquidity position has become tighter and the banks are now forced to up their margins to the range of 140 to 150 basis points," said a banker.

Bukhatir Group's main interests include construction, manufacturing, information technology, shopping malls, education, engineering services, real estate development, sports and the television media.

The group has an employee base of about 5,000 and an annual turnover in excess of Dh3 billion approximately.

A few months Bukhatir had signed an agreement creating the first investment agency sukuk in the Islamic finance market with a value of $50 million (Dh184 million).

Emirates Islamic Bank (EIB) and Liquidity Management Centre (LMC) were the lead arrangers for the Islamic finance deal, which woudl help support the aggressive expansion and investment activities of the Bukhatir Group.

The Sharia'a-compliant Sukuk Al-Wakala Bel-Istithmar is an innovative structure that was launched by the structuring advisor LMC and co-lead arranger EIB, offering investors the opportunity to be a part of an investment agency that will be managed by Bukhatir Investments Ltd. The sukuk is a reducing investment with a five-year term issue maturing in 2011 and offering investors a return of 175 basis points over 6-month $ Libor and payable semi-annually.

By Rajni C

© The Business Weekly 2007