Rlpc kghm joins cee flood headed back to loan market sources← Homepage
Jan 25 Polish copper and silver producer KGHM has joined a flood of syndicated loan borrowers in the region looking for early refinancing and extra capital for fear liquidity will dry up due to Europe's open-ended debt crisis. Bankers said KGHM was at the very early stage of discussions with potential lenders to gauge pricing expectations. It is seeking more than $1 billion of loan financing, one added."There is an opportunistic approach right now. Future liquidity is the main reason borrowers are looking at the market, as most have already refinanced their immediate needs," one banker said. KGHM was not immediately available for comment.
Both lenders and borrowers "have completely woken up to the fact that this is indeed a long-term crisis", a second banker added. Most of the negotiations between Central and Eastern European borrowers and lenders are still in the early stages. Russia's top crude producer Rosneft is seeking up to $2 billion only seven weeks after securing a $2 billion loan, while Ukrainian mining and steel group Metinvest is considering a $200-$300 million loan, having already agreed a $1 billion deal in November.
Croatian oil and gas company Industrija Nafte (INA) is also eyeing a refinancing loan, only five months on from signing a 200 million euro loan in September. Returning borrowers' negotiating strength on pricing and structure has been weakened, as lenders' available liquidity has tightened, which is expected to lead to larger bank syndicates, bankers said.
"Even with relationship lenders, borrowers are not going to get some kind of free lunch or easy deal. Borrowers should not focus on whether to pay 20 basis points more or less; liquidity is the point," a third banker said. The severity of price hikes varies greatly between lenders. With few benchmark deals in the market, many lenders are "scratching their heads" when asked to price new deals, a fourth banker said. Market-wide understanding of the challenges has improved, but borrowers' negotiating strategies still differ, with the more compliant companies far more likely to generate the required funds."Some borrowers are very realistic and not too aggressive on the pricing. Others still believe they can get away with cheap pricing for the sake of calling it a relationship deal," the first banker added.