Bank of China contributes to $1.8 billion loan to Qatar National Bank for general corporates and refinancing purposes

Project narrative

On August 8, 2012, Bank of China (BOC) contributed an estimated $120 million to a $1.8 billion syndicated loan facility to Qatar National Bank (QNB) for general corporate purposes. The loan had a maturity date of three years and a margin rate of 100 bps (1%) plus contemporary LIBOR. The lending syndicate included MUFG Bank (referred to in sources as Bank of Tokyo-Mitsubishi UFJ), Deutsche Bank, HSBC, JP Morgan, and Standard Chartered Bank as bookrunners and the original 5 lenders, joined later by Bank of China (BOC), DBS Bank, Mizuho, National Bank of Abu Dhabi (NBA), BofA Securities, Inc. (referred to in sources as Bank of America Merrill Lynch (BAML)), Bank of New York Mellon Corporation (BNY Mellon), Barclays, Citibank, Sumitomo Mitsui Banking Corporation (SMBC), and Commercial Bank of Qatar (P.S.Q.C.). The loan was initially offered at $1.5 billion. However, marketing efforts by the original 5 member lending syndicate to attract more banks were more successful than expected. The loan was oversubscribed up to $1.8 billion and spread across 15 lenders. All 5 members of the original syndicate had pledged to contribute $300 million each, but scaled back their contributions by an unknown amount as the syndicate grew. As the loan reportedly paid less than the cost of funding for many of the lenders, priced at just 100 bps above LIBOR per annum, sources analyzed the lenders' intentions as focused on relationship building with QNB rather than direct profits. For QNB, access to the longer-term maturity offered by the lending syndicate allowed it to diversify its investor base and better match its liabilities to its loans. The loan replaced a $1.85 billion facility that expired on July 22, 2012.