Melco-PBL takes $1.28b loan for new Taipa hotel

PUBLISHED : Tuesday, 14 February, 2006, 12:00am
UPDATED : Tuesday, 14 February, 2006, 12:00am

Melco-PBL Entertainment, the casino development joint venture between Stanley Ho Hung-sun's Melco International Development and Australia's Publishing and Broadcasting Ltd (PBL), announced yesterday it had secured a $1.28 billion syndicated loan from a consortium led by Macau banks to fund construction of the $1.5 billion, 227-room Crown Macau hotel and casino on Taipa Island.

The deal is the latest in a string of debt financing issues for Macau casino projects, many of which are being bankrolled by local lenders.

'Macau is one of the hottest debt markets in Asia,' Societe Generale Asia managing director Ashley Wilkins told an investors' conference in the territory yesterday.

But he cautioned that 'irrational exuberance [is] alive and well' in some of the deals that had taken place over the past year.

The term of the Melco-PBL loan is seven years and its interest rate of Hong Kong interbank offered rate plus 2.2 percentage points is among the lowest of recent deals.

Banco Nacional Ultramarino and Bank of China (Macau) have each committed $450 million, with Banco Comercial de Macau, ICBC (Asia), Banco Espirito Santo do Oriente (Macau) and Liu Chong Hing Bank (Macau) making up the balance.

Last month, MGM Grand Macau, a 50-50 joint venture between MGM Mirage and Pansy Ho Chiu-king, secured a US$700 million loan for construction of a US$1 billion, 600-room waterfront resort. Bank of China and Banco Nacional Ultramarino were among the eight arrangers of the deal.

The debt financing boom shows little sign of abating with competition expected to continue heating up. 'The bond market and banks are in a head-to-head fight,' Merrill Lynch (Asia-Pacific) managing director Sheldon Trainor said.