RUSAL may pay LIBOR +6/+7 pct on foreign debt-sources

MOSCOW, June 17 (Reuters) - Aluminium giant UC RUSAL could pay 6 or 7 percent over LIBOR on $7.3 billion of its foreign loans under the terms of a landmark restructuring deal currently being negotiated, banking sources said on Wednesday. The RUSAL restructuring talks -- expected to set a benchmark for dozens of restructurings under negotiation in Russia -- are seen as essential to Russia's ability to manage its $453 billion foreign debt and creditors' willingness to shoulder Russia risk. RUSAL said last week that the club of 70 international banks has agreed to reset the clock on debt talks, giving the world's largest aluminium producer until July 28 to restructure $7.3 billion in foreign loans. The rate is favourable, effectively in line with the rates Russia's quasi-sovereign borrowers have been paying on the eurobond market, where rates have come closer into line globally with the loan market. "RUSAL is not a borrower in default, it is a major aluminium producer which got into a bind in the crisis," said a source close to the restructuring talks. The source added that a margin of 600 to 700 basis points over Libor was under discussion. A Russian banking source confirmed that that rate was the subject of talks. The 600 to 700 basis point margin would not include up-front fees to the banks, the banking source said, adding that the all-included rate would be closer to 800 to 900 basis points. Russian borrowers were paying around 100 basis points over Libor before the crisis closed loan markets to them. RUSAL's all-in rate before the crisis was 132.5 basis points, reflected in the final public deal before the crisis, a two year, $4.5 billion bridge loan. Russia has seen no landmark loan deals since the crisis, but discussions between lenders and No.2 oil producer LUKOIL have centred on rates of 500 to 600 basis points, all included. Closer to 800 to 900 basis points was Russia's first post-crisis Eurobond, a $2.25 billion issue by gas export monopoly Gazprom priced at 9.25 percent and purchased largely by banks to refinance existing loans. CAUTION A source close to RUSAL shareholders -- who include Deripaska and two fellow tycoons, Viktor Vekselberg of BP joint venture TNK-BP and former Norilsk Nickel co-owner Mikhail Prokhorov -- cautioned against early optimism on the rate. "There are no agreements yet," the source said. Bankers have said consensus has been rare among the highly factionalised 70-strong foreign creditors' club. They have said that some lenders have greater exposure to RUSAL are more anxious to cut a deal than those who have redistributed risk. Western banks have already made provisions for the RUSAL loans and will be under pressure to bring the talks to a close in order to reduce the pressure on their capital. They must also win agreement on some provisions from Russian banks, who hold the remainder of RUSAL's $16.8 billion debt. A failure to agree on a restructuring deal before the standstill runs out could allow banks to call in loans, causing a chain reaction, which could leave creditors at the mercy of Russia's bankruptcy laws, largely untested in court and seen as unfavourable to lenders.