The Allianz-led group was selected as the preferred bidder for the 4.2 billion pound landmark Thames Tideway Tunnel. The consortium also includes investors Amber Infrastructure, Dalmore Capital, INPP, DIF and Swiss Life Asset Managers.

Bank of Tokyo-Mitsubishi UFJ, Credit Agricole, Lloyds, RBC, Santander and SMBC have provided a 1 billion pound, 10-year revolving credit facility. Some of the loan will be syndicated to other banks, the sources said.

The margin is around 100bp over Libor and the deal includes a commitment fee of 35 percent of the margin, the sources said.

Allianz was not immediately available to comment.

The project is expected to be initially funded with equity before the loan is drawn down to fund capital expenditure activity. The loan is then likely to be refinanced to the original level via the bond market, the sources said.

Funding the deal in this way will save the cost of paying a large commitment fee on debt, which is not needed straight away.

A bond issuance is expected in the third or fourth year, one of the sources said.

The UBS-led process to provide investment for the Thames Tideway Tunnel was formally launched in spring 2014 with construction work due to begin in 2016 and to be completed by 2023.

(Editing by Christopher Mangham)

By Claire Ruckin