11-17-2013, 12:04 AM
Art,
It's a little early to know for sure what this syndicated group's appetite is for full blown project financings. After coming through the world recession banks are getting more of an appetite for risk; much more than back when PNG had to go to IPIC to secure financing for its PNG LNG state because banks had seized up in 2007-08.
My guess is that this syndicate will see how this first facility goes; based on their DD it's pretty obvious that all parties expect a sell-down to happen quickly. The terms give IOC all they need to operate and quell any bidder thoughts about bleeding IOC dry of cash by delaying negotiations. They also anticipate a quick payoff of the facility. Once that happens and IOC is derisked, new negotiations for a facility can take place and IOC can have in place credit on normal terms (LIBOR without a rate kicker). A partnership with a supermajor will have banks lining up to lend a helping hand.
Look at lil ol EWC. They have had Standard Charter backing them for years on their projects. IOC will likely have a similar setup. They have to in this industry.
It's a little early to know for sure what this syndicated group's appetite is for full blown project financings. After coming through the world recession banks are getting more of an appetite for risk; much more than back when PNG had to go to IPIC to secure financing for its PNG LNG state because banks had seized up in 2007-08.
My guess is that this syndicate will see how this first facility goes; based on their DD it's pretty obvious that all parties expect a sell-down to happen quickly. The terms give IOC all they need to operate and quell any bidder thoughts about bleeding IOC dry of cash by delaying negotiations. They also anticipate a quick payoff of the facility. Once that happens and IOC is derisked, new negotiations for a facility can take place and IOC can have in place credit on normal terms (LIBOR without a rate kicker). A partnership with a supermajor will have banks lining up to lend a helping hand.
Look at lil ol EWC. They have had Standard Charter backing them for years on their projects. IOC will likely have a similar setup. They have to in this industry.