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Ten year itch

01 November 2005

Sponsors are basking in the lowest offshore margins for Thai power deals in ten years. But after the current refinancing wave, will there be any dollar business left? By Dominic Jones.

Read more: [power projects] [power projects] [project finance] [BOT] [project finance]

Debt margins in the Thai power market have continued to drop and have reached a 10-year low for greenfield deals. Although welcome news for sponsors, it is a situation that lenders believe cannot last.

The greenfield independent power project (IPP) that will benefit from the 10-year pricing low is Gulf Power, backed by Thailand's Electricity Generating Plc (in which China Light & Power has a stake) and Japan's Electric Power Development.

In most respects, the Gulf Power project is a conventional Thai IPP venture, with a standard 14.5-year term for the offshore loan and unremarkable gearing.

Colin Chen, at Bank of Tokyo-Mitsubishi – one of the five arrangers, alongside Fortis, ING, DZ Bank and Mizuho – says the $129 million offshore loan will replace part of the $660 million-equivalent onshore loans, provided by Thai banks, including Siam City Bank, UOB Radanasin Bank and Thai Military Bank. "Its not a...

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