BASIS POINT-Margins set on loans for PNG gas project

MELBOURNE, Oct 30 (Reuters Basis Point) - Margins have been set on commercial bank and export credit agency loans for a liquefied natural gas project led by ExxonMobil Corp in Papua New Guinea, according to term sheets.

The two loans, amounting to at least $5.5 billion, are part of a package to fund the project that also includes a $3.5 billion loan from ExxonMobil and up to $2 billion in bonds.

The $1.5-3 billion commercial bank loan will pay margins of 325 bps over Libor during the five and a half year construction period, 400 bps for the first four and a half years of operations and 425 bps for the next five years of operations.

Around 20 banks have submitted more than $5 billion in commitments. For more details, see below.

Margins have also been set for the loans guaranteed by export credit agencies Export-Import Bank of the US, Italy's SACE and Japan's Nippon Export and Investment Insurance (NEXI).

The borrowers are offering 150 bps over Libor for the US-Exim guaranteed tranche, 165 bps for the SACE-guaranteed tranche and 175 bps for the NEXI tranche during the construction phase.

This will rise during the operating phase to 165 bps over Libor for the US-Exim tranche, 185 bps for SACE and 190 bps for the Nexi tranche.

The borrowers are also offering to pay a commitment fee of 50 percent of the respective margins on all the loans.

Lenders were given until Thursday morning to respond to the proposed pricing before the sponsors firm up the lead bank group.

However, bankers believe the proposed bond issue may not go ahead due to difficulties in securing an investment-grade rating, which is likely to increase the amount of commercial bank and ECA-supported debt needed.

ExxonMobil was not available to comment. SG, the financial adviser to the partners in the project, declined to comment.

The other partners in the project are Australian firms Oil Search Ltd and Santos Ltd, Japan's Nippon Oil Corp and local PNG landowners.



Front-end fees for the commercial bank loan:

260 bps for more than $175 million

230 bps for $150 million to $175 million

200 bps for $75 million to $150 million

175 bps for less than $75 million



Commitments:

Australia & New Zealand Bank

Commonwealth Bank of Australia

National Australia Bank

Westpac Banking Corp

Bank of Tokyo-Mitsubishi UFJ

Mizuho Corporate Bank

Sumitomo Mitsui Banking Corp

Barclays Capital

BNP Paribas

Calyon

Credit Industrial et Commercial

ING Bank

Intesa Sanpaolo

Unicredit

SG

KBC Bank

Natixis

China Development Bank

Standard Chartered Bank


(Reporting by Sharon Klyne)
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