LONDON, June 27 German industrial gases group Linde is in talks with its banks over the refinancing of its undrawn 2.5 billion euro ($3.25 billion) credit facility that is due to mature in May 2015, banking sources said.
Linde, seeking to take advantage of banks' appetite to lend, aims to refinance early and lock in future liquidity at currently low prices, the sources said.
Competition among international and domestic banks to win loan business, especially in Germany, is stiff as lenders target borrowers in Europe's stronger economies, meaning that loan pricing is coming under increased pressure.
A/A3 rated Linde is looking to match the benchmark 25 basis points (bps) margin set by A+/A1 rated German chemicals firm BASF on a 3 billion euro loan in March, one of the sources said.
The self-arranged deal is expected to carry a five-year maturity with two one-year extension options.
Linde declined to comment.
Linde's existing revolver was arranged in May 2010 with a syndicate of 25 banks and paid a 65 bps margin.
Year to date European investment grade loan volume totals $231 billion, according to Thomson Reuters LPC data, slightly down on the $245 billion in the first half of 2012 but 32 percent down from the first half of 2011, as demand has fallen after a big refinancing round and a lack of M&A activity, leaving banks hungry for new business.
($1 = 0.7691 euros) (Reporting by Alasdair Reilly; Editing by Elaine Hardcastle)