FerroChina

Credit Suisse is arranging a US$200 m loan for SGX-listed steelmaker FerroChina to refinance debt and for other corporate needs, banking sources said Tue. The 3-year syndicated loan will offer 450 basis points above the London Interbank Offered Rate (LIBOR), one of the sources briefed on the deal told Reuters.

FerroChina, which makes galvanised steel in China, is widely seen as a takeover target after it appointed Merrill Lynch as an adviser to look at strategic options for the firm. FerroChina was not immediately available for comment.

"In current market conditions, this should be bearish news as US$200 m will add to gearing," said a dealer at a local broker. "Previously the firm also issued some convertible bonds, so market investors may view it as negative news because of its over-gearing, and it looks like their debt-level is pretty high."

FerroChina's long term debt-to-equity ratio is 0.19, which is higher than most other SGX-listed steel firms. In May, Chinese media reported that Australia and Russian firms are eyeing at least a 20% stake in the China-based company.