By Simon Pirani
Sakhalin Energy, the project company majority-owned by Shell, last month announced that about half of the estimated $10 billion cost of its LNG plant is likely to be debt financed. Most of the debt will come from a group of multilaterals and export credit agencies led by the Japanese Bank for International Cooperation (JBIC). But up to $2 billion is expected to be funded by a bond issue or syndicated loan.
CSFB, taken on in December 2000 as financial adviser to Sakhalin Energy, would be strongly placed to win the mandate for a bond issue. But if a portion of the debt is syndicated to the bank market, another arranger, or more likely group of arrangers, would be brought in. Société Générale and BNP Paribas are among the frontrunners.
Peter Firmin, director in CSFB's global energy group, says the attraction of financing through a bond "is that capital markets can offer a longer tenor than straight bank debt, or even agency money - and with a very back-ended structure, which is attractive in the current climate. Clearly the sweet spot for capacity and liquidity - tenor and pricing - is distribution via the Rule 144a market."
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