JPMorgan and two Kuwaiti lenders are joining HSBC in a $6 billion financing syndicate for prospective buyers of a stake in Kuwait Petroleum Corporation’s crude oil pipeline network, three people with knowledge of the matter told Reuters. KPC has been in talks with a group of potential investors over a stake sale in its crude oil pipelines estimated to be worth around $7 billion, Reuters reported in February.
However, the process was thrown into uncertainty by the U.S.-Israeli war with Iran, with the state energy company saying it suffered “severe material damage” at some operating units after drone attacks. It did not specify which units were hit. The company has pushed back the deadline for preliminary bids to April 28 from April 7, after investors said they needed more time due to the fast-evolving conflict, two of the three sources said. A ceasefire between the United States and Iran was announced on April 8. Investors are seeking guarantees for the risk of volume disruptions through Kuwait’s pipeline network and the Strait of Hormuz, one of the sources said.
TERMS OF THE LOAN
The loan JPMorgan and others are offering to finance the KPC pipeline stake deal has a 20-year tenure and indicative pricing of 170 basis points over the Secured Overnight Financing Rate, the people said. National Bank of Kuwait and Kuwait Finance House are also participating in the loan, said the people, who declined to be named as the matter was not public.
One of the people described the pricing as competitive given current market conditions in the region. HSBC and JPMorgan, which is advising KPC on the process, declined to comment. KPC, NBK and KFH did not respond to requests for comment.
The three banks join HSBC, which Reuters reported had taken a lead underwriting role on the transaction.
The process for the stake sale was launched just before joint U.S.-Israeli strikes on Iran on February 28 and subsequent Iranian strikes against Israel, U.S. bases and Gulf states.
Kuwait’s central bank responded to the conflict by easing a series of regulatory requirements on local lenders, loosening liquidity standards including the coverage ratio and net stable funding ratio and raising lending limits, in a bid to keep credit flowing and support economic stability.
The KPC transaction is the latest in a series of pipeline fundraisings by Gulf national oil companies, following similar deals by Saudi Aramco, Abu Dhabi National Oil Company and Bahrain’s Bapco Energies.
KPC’s pipeline network transports crude oil and refined products across Kuwait, linking the country’s oilfields to export terminals on the Arabian Gulf.
(Hadeel Al Sayeh in Dubai, Editing by Maha El Dahan, Anousha Sakoui and Emelia Sithole-Matarise)