Dubai World picking banks to arrange $5 bln loan-banker

State-owned investment group Dubai World is appointing banks to arrange a syndicated term loan that will refinance the borrower's $5 billion, 364-day bridge loan signed last year.

Eight banks-Bank of Tokyo-Mitsubishi UFJ, Calyon, Deutsche Bank , Emirates Bank EBIL.DU, HSBC , ING , Lloyds TSB and Royal Bank of Scotland are in the arranging group so far, which is expected to be expanded. The loan is expected to consist of a two-year tranche and a three-year tranche, worth $2 billion each, and a $1 billion, five-year tranche. The lead banks are aiming to be left holding $250 million each, leaving $2.5 billion to sell in a wider syndication. The original $5 billion loan backed the borrower's plan to buy into U.S. casino operator MGM Mirage . It paid a margin of 85 basis points (bps) over LIBOR for the first six months, stepping up to 110 bps.Pricing on the new deal will be higher to reflect current market conditions, which have deteriorated since the original loan was signed, and is expected to be 100 bps for the two-year tranche, 125 bps on the three-year and 150 bps on the five-year.

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