Mining giant Anglo American will increase a $3.5 billion syndicated loan after raising an oversubscription, underlining loan market demand for defensive commodity-linked credits, a banker said on Thursday.

The syndication went very well and the facility will be increased which still leaves room for lenders to be scaled back, said the banker, who wished not to be identified.

The loan, which will be used for general corporate purposes, had a low profile syndication via arrangers Barclays, BBVA, BNP Paribas and Royal Bank of Scotland.

It has a three-year maturity and is split between a $1.75 billion term loan and a $1.75 billion revolving credit, both of which pay an interest margin of around 60 basis points, according to various sources.

The deal proved successful at a time of restricted bank capital partly as a result of Anglo's strategy of mandating three banks -- Barclays, BNP Paribas and RBS -- to arrange an initial bridge loan, and awarding the refinancing mandates for one loan and two bonds to the same trio.

Anglo American tapped the bond market twice in April, pricing a 400 million pounds, ten-year bond issue late that month and a 1 billion euro, seven-year bond earlier the same month via Barclays, BNP Paribas and Royal Bank of Scotland.

This gave the arranging banks tangible ancillary business upfront that allowed them to make money on the corporate loan, sources said.

Anglo American is rated A- by S&P and A2 by Moody's.


Anglo's loan has also benefitted from the loan market's appetite for exposure to the commodity sector via mining companies and commodities producers and traders which are seen as a strong defensive play in a slowing economic environment.

BHP Billiton's mammoth $55 billion loan is still in play and is expected to fund at the beginning of next year after BHP issues its takeover offer to Rio Tinto's shareholders following regulatory clearance later this year.

Commodities trading companies have also been seeking to turn uncomitted bilateral loans into larger committed syndicated loans to finance increased working capital costs as the price of commodities has risen.

Global agribusiness trader Bunge Finance Europe, and Swiss-based comodities producer and trader Glencore [GLEN.UL] have borrowed recently, along with commodities traders Trafigura, Stemcor and Gunvor International.

(Reporting by Zaida Espana & Tessa Walsh; editing by Rory Channing)

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