Some Banks Not Ready for OSX Risk

Some banks are giving OSX’s $850m 12-year loan a wide berth even after a recent upward flex. This comes as European banks feel the sting of the euro-zone debt crisis not only through higher funding costs, but also in terms of risk aversion. The oil service company, controlled by Brazilian magnate Eike Batista, has yet to develop a track record and hence is seen as less attractive than other such Brazilian companies, say bankers. “It is really an issue of the borrower. We don’t have a relationship with them,” said one banker at a European financial institution. But other non-European institutions are taking a similar view. “The group has been successful in raising money, which is an accomplishment. (But) we would like to see more of track record,” said a banker at an Asian institution. Just recently margins were flexed to Libor+425bp from 375bp for the pre-construction period, and to 400bp from 360bp for post-construction, according to a banker looking at the trade. ING and Santander are lead arrangers.