RLPC-UPDATE 1-Schneider Electric cuts pricing on loan-bankers

LONDON, Aug 10 (Reuters) - French engineering group Schneider Electric (SCHN.PA) has made a bold move to cut its borrowing costs on a 1.5 billion euro ($2.13 billion) refinancing loan.

Schneider, which has approached a group of 14 relationship banks to arrange the deal, has cut the interest margin on the three year loan to 125 basis points (bps) over EURIBOR from 150 bps before, while the five year tranche has gone down to 165 bps from 175 bps, two bankers said on Monday.

Schneider joins French supermarket retailer Auchan in looking for greater financial flexibility from its lenders after a recent improvement in tone in the European credit market.

Auchan last week secured an 800 million euro loan with a five year maturity, bucking a trend for shorter-term lending in the European syndicated loan market. [ID:nL7356183]

Auchan's loan was welcomed in some quarters as a sign the European market is stabilising, but other bankers railed at what they described as an aggressively structured deal.

Schneider's move to reduce borrowing costs comes after Pernod Ricard's former chief financial officer Emmanuel Babeau took up his role as new financial officer in July.

Babeau is a well known CFO in the European syndicated loan market having worked at Pernod since 1993, and is recognised as instrumental in arranging Pernod's 11.5 billion euro loan backing the Vin & Sprit acquisition.

Schneider, which provides switches and electricity distribution gear, is also offering a reduced fee to lenders committing top tickets of 200 million euros of 125 bps from 150 bps originally.

No one at Schneider could immediately be reached for comment.

Along with a five-year maturity, Schneider's financing does not carry a financial covenant which could prove challenging, a third source said.

However, bankers added that the company has the backing of a number of strong relationship banks that should see the self-arranged 1.5 billion refinancing comfortably done and potentially increased to the 2 billion euro target amount during syndication.

Schneider is rated A- and A3 by Standard & Poor's and Moody's respectively. (Reporting by Zaida Espana; Editing by Jon Loades-Carter)