TuranAlem prepares Islamic loan for $400 m.; Kazakh borrowers still diversify credit base

/EuroWeek, March 14, 06/ - Kazakh bank TuranAlem in the nearest future will appoint two banks as organizers of murabakha loan for $400 m., indexed relative to commodity price. Sources say this will be the biggest Islamic loan, borrowed by the bank outside Near East. Bank TuranAlem, which first requested applications for murabakha loan organization with the volume of $100 m. intending to borrow $300 m., has set for banks a target on borrowing about $500 m. There were reqyested applications from about 20 creditors, according to EuroWeek. The loan will be divided into two tranches - one-year and two-year terms. The rate will be lower than 100 b.p., a representative of one of banks said. TuranAlem borrowed its first Islamic loan - annual mubarakha volume $50 m. - last March via book-runner Calyon. Margin was equivalent to Libor +100 b.p. The bank borrowed the last traditional loan in September for a total of $777 m. Murabakha loan is a contract between buyer and seller, by which goods are exchanged at a special price, according to Islamic Shariat laws. However several Shariat commissions expressed disapproval concerning murabakha deals, indexed relative to the price of any goods (as TuranAlem's new loan), calling them a cover for usual loans, giving interest income. As a result loans of such Kazakh borrowers as bank Alliance and bank CenterCredit, "tied" on the stage of approval by these commissions. "In order to enlist the support of Shariat commission and Islamic creditors, TuranAlem agreed to limit usage of received funds by presenting Islamic loans to its clients", - a representative of one of banks, submitted an application for participation, said. Kazkommertsbank (KKB) also wants to diversify its credit base. It accepts applications for participation in Schuldschein deal with the volume of $100- 200 m. - promissory note issue, in compliance with German legislation. It also negotiates with EBRD about a $200 m. loan, divided into two tranches (A and B). Schuldscheine are normally organized and realized to German investors. Banks say structure for the term of three years and volume of $200 m. is most probable. EBRD's funding provides participation of commercial creditors, however the main, official creditor is EBRD, so the structure will let KKB increase the term of the loan. [2006-03-15]