ICBC contributes to a $16 billion USD syndicated loan to the Government of Saudi Arabia for refinancing and general budget purposes (Linked to Record ID#72310, #97697, #97698, and #72312)

Project narrative

In May 2016, a syndicate of 14 commercial banks — including the Bank of China (BOC), China Construction Bank Corporation (CCB), and Industrial and Commercial Bank of China (ICBC) — signed a $10.0 billion USD syndicated term loan facility agreement with the Government of Saudi Arabia. This loan carried a maturity period of five years with two one-year extension options, a final maturity date in 2021, an interest rate of LIBOR plus a margin of 105 basis points (bps), and an all-in interest rate of 120 bps. The loan was repayable in full on maturity. The proceeds of this loan were to be used by the borrower for general budget purposes; namely, however, to fill the budget gap for the government amidst low global crude oil prices, which shrunk revenues from petrodollars. In 2015, the Government of Saudi Arabia ran a 15% budget deficit, a figure that was expected to increase for 2016 around loan signing. ICBC contributed $950 million USD to the loan syndicate. The contribution of the other banks are unknown. Record ID#72310 captures BOC's contribution. Record ID#97697 captures CCB's contribution. Record ID#97698 captures ICBC's contribution. Then, on March 19, 2018, a syndicate of 16 banks — including BOC and ICBC — signed a $16.0 billion USD syndicated term loan facility agreement with the Government of Saudi Arabia. This loan was divided into two tranches: a $8.35 billion USD and an $7.65 billion USD Islamic tranche. This loan carried a maturity period of five years, a final maturity date in 2023, an interest rate of LIBOR plus a margin of 75 bps, and an all-in interest rate of LIBOR plus 84 bps. The loan was repayable in full on maturity. The proceeds of this loan were used by the borrower to refinance the 2016 $10 billion USD syndicated loan. Record ID#72312 captures BOC's contribution. Record ID#97699 captures ICBC's contribution. In addition to BOC and ICBC, the following lenders contributed to the loan syndicate: HSBC Bank, JPMorgan Chase Bank, the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), Citibank, Crédit Agricole Group, Mizuho Bank, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation (SMBC), BNP Paribas S.A., Goldman Sachs, Société Générale S.A. (SocGen), Bank of America Merrill Lynch (BAML), Deutsche Bank, and Morgan Stanley. HSBC, JPMorgan, and BTMU served as coordinators, bookrunners, and mandated lead arrangers. BOC, ICBC, Citibank, Crédit Agricole, Mizuho Bank, Standard Chartered, and SMBC served as bookrunners and mandated lead arrangers. BNP Paribas, Goldman Sachs, and SocGen served as mandated lead arrangers. BAML, Deutsche Bank, and Morgan Stanley served as lead arrangers. The loan was oversubscribed from its $10 billion USD target by $6 billion USD. Reportedly the Government of Saudi Arabia could have successfully up-sized the facility to between $20 billion and $25 billion USD if it chose so. The inclusion of the Islamic tranche was to meet demand for Shariah compliant issuances from Saudi Arabia and was to support Saudi Arabia's Vision 2030 of becoming the world's leading Islamic finance hub.