Usiminas Goes for Tight Yen Loan

Brazilian steelmaker Usiminas is in Tokyo looking to syndicate an up to $350m 8-year B loan through SMBC. The B portion, part of an IDB A/B facility, is being targeted solely at Japanese banks for just 75bp over Libor. That spread seems unrealistically low for a market in which many European and US banks are funding themselves at 100bp-150bp over Libor. But people close to the matter say large Japanese banks such as Mizuho and Tokyo-Mitsubishi (BTM), as well as smaller Japanese institutions, have very close ties to Usiminas through relationships with its largest shareholder Nippon steel, which is accompanying Usiminas at Tokyo bank meetings. The company wants to lean on those ties to squeeze out a margin that is by all measures below market. Earlier this year, SMBC is heard to have won the mandate by promising to deliver Libor plus 75bp, which surprised others that pitched. A banker on the deal declines to comment on margins and fees. But people close to the borrower acknowledge it is shooting for 75bp, though they concede that level may not necessarily be achieved. The IDB is also providing a $50m 10-year A loan, its first to be denominated in yen. Proceeds are for a new power plant near an Usiminas facility in Minas Gerais. Last month, Usiminas clinched a 2-tranche BRL493m 7-year facility at 176bp over TJLP and a basket of currencies. In September, it raised $550m through a JBIC A/B loan, $275m of which was syndicated to a club made up of SMBC, Mizuho and BTM. In February, the steelmaker obtained $1.3bn in a 2-part syndicated loan via HSBC, with 5 and 7 year tenors on a trade facility paying Libor plus 110bp and 135bp respectively, as well as a 2-year liquidity facility at Libor plus 75bp. And in June 2007, it raised a $300m 5-year standby facility via Calyon and HSBC at 25bp over Libor out of the box.