Tatneft Seeks Refinance of LIBOR-Based Loan Russian oil giant has recent history of loans with rates based on LIBOR

January 14, 2010

According to Reuters, Tatneft, one of Russia’s largest oil companies, is seeking a refinance of an existing loan with rates based on LIBOR, the London Interbank Offered Rate. LIBOR is a filtered average of rates that banks charge each other for unsecured, short-term loans.

Tatneft has begun negotiations on a $2 billion loan it took out in April 2008 to finance construction of a refinery. Cost of funds on the 25-month loan is LIBOR plus 165 basis points (1.65%). There is no indication yet as to what type of loan might replace the current one or what margin over LIBOR would be paid as interest, should LIBOR be the benchmark for the new financing. LIBORATED.com reported on other LIBOR-based financing that Tatneft secured in 2009: a $1.5 billion pre-export loan also used to fund refinery construction. This loan is split in two tranches, one at LIBOR plus 585 basis points (5.85%) and the other at LIBOR plus 685 basis points (6.85%).

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