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Middle East

CASE STUDY: KNPC Scores Largest Dual-Tranche Syndicate Loan in Kuwait to Date

The deal was the largest ever syndicated Kuwaiti Dinar financing in the country. NBK acted as Coordinator, Initial Mandated Lead Arranger and Global Facility Agent for the KWD710mn KNPC Conventional Facility and KWD490mn Murabaha Islamic Facility for the Clean Fuels Project.

Mar 30, 2017 // 1:44PM

Background

The Kuwait National Petroleum Company (KNPC) has historically self-financed its projects.

The Clean Fuel Project (CFP), with a project value exceeding KWD4.08bn, was the first project undertaken by KNPC funded through external borrowing.

Once complete, the project, which involves the upgrade and integration of the Mina Abdulla (MAB) and Mina Al Ahmadi (MAA) refineries, will increase the combined capacity of the refineries from the existing 736,000 barrels per day to 800,000 barrels per day, and will lower the sulphur content of petroleum products to 5%.

Transaction Breakdown

KNPC appointed Watani Investment Company KSCC (NBK Capital) to act as exclusive financial advisor in connection with the proposed financing arrangements for the completion of the CFP.

The debt financing for CFP was envisaged to be provided by multiple sources selected by KNPC, including conventional and Sharia-compliant commercial banks, as well as export credit agencies, with KWD and USD-denominated tranches.

The KWD1.2bn financing (equivalent to US$4bn) has an amortizing structure with a tenor of 10 years. The facility was structured transaction wherein most of the feedstock payments were subordinated to lenders dues, providing lenders a superior position in cash waterfall.

National Bank of Kuwait S.A.K.P (NBK) and Kuwait Finance House K.S.C.P (KFH) were appointed as Bookrunners and Initial Mandated Lead Arrangers for the KWD1.2bn facility. NBK acted as book runner for the conventional tranche, while KFH was book runner for the Islamic Tranche.  

The KWD1.2bn facility was successfully syndicated to 11 local and regional conventional and Islamic banks.

The deal, which was oversubscribed, is the largest ever syndicated Kuwaiti Dinar dual-tranche facility in Kuwait. Featuring a structure that included Islamic and conventional tranches enabled KNPC to mop up liquidity from both Islamic and conventional banks, giving it access to a wider and more diverse pool of funding.

Middle East Deals Islamic Finance CEEMEA CEE & Turkey

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