DESPITE mounting pressure on banking credit facilities, BHP Billiton is in the final stages of securing sub-underwriting banking agreements for its record 55 billion US dollars loan for the RioTinto takeover offer. In February, BHPB mandated Barclays, BNP Paribas, Citigroup, Goldman Sachs, HSBC, Santander and UBS as lead arrangers. Ten banks were asked to sub-underwrite the deal with commitments of 2.5 billion US dollars each. The reported fee of 60 basis points is now only 25 percent above the inter-bank rate, which leaves little profit on the loan. Banks are increasingly asking for a rise in investment-grade loan pricing to cover their increased funding costs.
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