DUBAI: Saudi Arabia's Etihad Etisalat (Mobily) signed a 10 billion riyals ($2.67 billion) sharia-compliant loan refinancing with a group of seven local banks, the telco said on Sunday, taking advantage of favourable borrowing rates in the kingdom.
Mobily, Saudi Arabia's second-largest telecoms operator by market capitalisation, rolled three existing facilities into a new, four-tranche Islamic loan with tenors of between five and seven years, the statement said.
Mobily said it undertook the refinancing now, rather than in the future, because of the attractive borrowing rates currently available in the local bank market.
Two tranches of the facility carried a profit rate of 0.7 percent over the Saudi Interbank Offered Rate (SAIBOR), with the remaining two pieces priced at 0.65 percent over SAIBOR.
The facility, which was 3.5-times covered by the seven banks involved in the deal, will be used to grow its revenues as well as invest in its broadband and data services business, Mobily said in a bourse statement.
The three loans being refinanced were the remnants of its 10.78 billion riyals debut loan signed in 2007 a 1.5 billion riyals facility signed in 2009 and a 1.2 billion riyals short-term loan agreed in December 2010, the statement added.
The seven banks provided the refinancing were: Al Rajhi Bank, Banque Saudi Fransi, National Commercial Bank, Riyad Bank, Samba Financial Group, Saudi British Bank and Saudi Hollandi Bank.
The transaction had been worked on in late 2011 and bankers told Reuters at the time the loan had been well-backed by banks because of Mobily's standing in the market.
The carrier, an affiliate of the United Arab Emirates' Etisalat, posted a 16 percent rise in fourth-quarter profits last month, buoyed by higher data revenue and post-paid mobile subscriber numbers.
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