25 July 2001


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The 24 lenders are as follows:

Arrangers @ EUR 7.5m (3):
Bayerische Hypo- und
Vereinsbank
Raiffeisen Zentralbank Österreich
Sumitomo Mitsui Banking

Co-arrangers @ EUR 6.75m (6):
Deutsche Girozentrale International
LB Kiel
Lloyds TSB Bank
Mizuho Financial Group (Fuji) @ EUR 3.75m:
BBL Financial Services Dublin
ING Barings

Lead managers @ EUR 4.5m (5):
Banco di Sicilia London branch
Europa Bank
Landesbank Baden Württemberg London branch
Norddeutsche Landesbank
Luxembourg
SanPaolo IMI London branch

Managers (10): @ EUR 2.5m
Banca Nazionale del Lavoro
International
Arab Bank
Baden-Württembergische Bank
Banca di Roma
Banque et Caisse d’Epargne de l’Etat Luxembourg
Bremer Landesbank
Salzburger Landes-Hypothekenbank
UniCredito Italiano London branch
Vs˙eobecná úverová banka
Zürcher Kantonalbank
Total: EUR 100m




BoV receives varied, enthusiastic response to EUR100m syndicated loan


By David Lindsay

Investors from across the globe have scrambled to take up Bank of Valletta’s offer for a EUR100 million syndicated loan. The lenders, which total no less than 24, range from 11 countries (see box).

Due to the popularity of the offer, syndicate commitments had to be scaled back slightly, even after the substantial increase.

According to lending market sources, a shortage of quality Mediterranean currency in the market throughout the deal’s duration helped the loan along, even though ‘this seasoned, stable-regime euromarket borrower has always proved popular with German and Japanese lenders.’

The loan matures in three years and has a margin of 32.5 basis points over the London Inter-Bank Offer Rate (LIBOR) - the interest rate that the largest international banks charge each other for loans.

This new syndicated loan is the sixth to be taken on by Bank of Valletta. In 1997 the bank had sold some subordinated debentures in New York – meaning that this is, in effect, the seventh time that it had tapped the international capital market.

The syndicated loans and the subordinated debentures, explained Tom Anastasi Pace - BoV financial markets chief officer - at the loan’s launch, were all taken on an unsecured basis and were denominated in US dollars and in euro. The proceeds of the loans were used for general funding purposes and, for instance, were utilised to fund long-term loans in euro to local customers of the bank.

Mr Anastasi adds, "The syndicated loan market is a large and active market and banks and financial institutions are the major players, both as lenders and as borrowers, and syndicated loans are a relatively cheap and efficient method of raising long-term funds.

"Some of the loans taken on by the bank have now been repaid. In March 2001, a five-year loan for $50 million matured and was duly repaid by the bank. It was decided at the time to seek to replace this facility with a new syndicated loan that would be denominated in US dollars or in euro, with the choice of the currency of draw down to be made at a later date.

"The reception in the market to the bank's name was very supportive and, in view of the strong interest, the bank decided to increase the size of the loan, thus taking advantage of the favourable market conditions as well as spreading the costs of the transaction over a larger amount.

"The increased proceeds will be utilised by the bank to expand the portfolio of debt securities it holds.

"Just before the finalisation of the loan-documentation, the bank decided to denominate the new loan in euro for practical reasons. The Bank of Valletta's policy is to carry zero currency risk and currency swaps are used extensively to ensure that any currency risks are fully hedged or closed.

Continues on back page Investors from across the globe have scrambled to take up Bank of Valletta’s offer for a EUR100 million syndicated loan. The lenders, which total no less than 24, range from 11 countries (see box).

Due to the popularity of the offer, syndicate commitments had to be scaled back slightly, even after the substantial increase.

According to lending market sources, a shortage of quality Mediterranean currency in the market throughout the deal’s duration helped the loan along, even though ‘this seasoned, stable-regime euromarket borrower has always proved popular with German and Japanese lenders.’

The loan matures in three years and has a margin of 32.5 basis points over the London Inter-Bank Offer Rate (LIBOR) - the interest rate that the largest international banks charge each other for loans.

This new syndicated loan is the sixth to be taken on by Bank of Valletta. In 1997 the bank had sold some subordinated debentures in New York – meaning that this is, in effect, the seventh time that it had tapped the international capital market.

The syndicated loans and the subordinated debentures, explained Tom Anastasi Pace - BoV financial markets chief officer - at the loan’s launch, were all taken on an unsecured basis and were denominated in US dollars and in euro. The proceeds of the loans were used for general funding purposes and, for instance, were utilised to fund long-term loans in euro to local customers of the bank.

Mr Anastasi adds, "The syndicated loan market is a large and active market and banks and financial institutions are the major players, both as lenders and as borrowers, and syndicated loans are a relatively cheap and efficient method of raising long-term funds.

"Some of the loans taken on by the bank have now been repaid. In March 2001, a five-year loan for $50 million matured and was duly repaid by the bank. It was decided at the time to seek to replace this facility with a new syndicated loan that would be denominated in US dollars or in euro, with the choice of the currency of draw down to be made at a later date.

"The reception in the market to the bank's name was very supportive and, in view of the strong interest, the bank decided to increase the size of the loan, thus taking advantage of the favourable market conditions as well as spreading the costs of the transaction over a larger amount.

"The increased proceeds will be utilised by the bank to expand the portfolio of debt securities it holds.

"Just before the finalisation of the loan-documentation, the bank decided to denominate the new loan in euro for practical reasons. The Bank of Valletta's policy is to carry zero currency risk and currency swaps are used extensively to ensure that any currency risks are fully hedged or closed. The swap market in euro is particularly liquid."

The Bank of Valletta Group views the latest syndicated loan as an important step in its corporate development, while it is also expecting many interesting challenges in the coming years, including Malta’s potential accession to European Union membership.

BoV has recently found success in restructuring its operations and has positioned itself to take advantage of the opportunities the future would present. Among the initiatives recently undertaken is the introduction of a sales culture as the basis of staff-motivation complemented by the introduction of a performance-related pay system.

New delivery channels are also being exploited and is expected to revolutionise the way the bank carries out business with its customers.

BoV has also been a key player in the development of the local capital market through a number of IPOs and other offerings being concluded successfully, while the bank has been very prominent in the Malta Government privatisation process, including the proposed privatisation of the Malta International Airport, among others.



The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt