Reuters reported that Abu Dhabi National Energy Company has sold USD 1.5 billion in bonds maturing in 5 and 10 years to refinance upcoming debt.
The company issued USD 750 million in 5 year bonds paying a premium of 330 basis points over comparable US Treasuries and an equal amount of 10 year paper at a spread of 390 basis points over Treasuries.
In a sign of strong investor demand, the pricing came at the tighter range of a downwardly revised guidance of 335 basis points and 400 basis points for the bonds maturing in five and 10 years respectively. The 5 year tranche had a reoffer price of 99.5020 and a coupon of 4.125%. The 10 year tranche had a reoffer price of 99.5150 and a coupon of 5.875%.
TAQA which is 75% owned by the government of Abu Dhabi last month said it would buy back USD 1.5 billion bond maturing October 2012 and enlisted four banks to sell new debt.
Mr Luz Padilla emerging markets fixed income fund portfolio manager at Los Angeles based DoubleLine said that "To me it is sensible what issuers are doing. They are taking advantage of a window that is there, created by some optimism regarding the European debt situation. They offered a decent spread concession and that is enticing people before year end."
The leaders of France and Germany agreed a master plan to impose budget discipline across the euro zone ahead of a meeting of European Union leaders in Brussels on Thursday and Friday. Given that the latest chapter in the crisis is not written yet, debt issuers are taking advantage of whatever remaining liquidity there is in the market before year end.
TAQA is a regular issuer of debt in global markets and benefits from implicit backing from the Abu Dhabi government as one of its strategic firms. Abu Dhabi holds over 90% of the UAE's oil reserves.
Mr John Bates head of fixed income at asset manager Silk Invest said that "As a government controlled investment entity and as a provider of the bulk of power and water to the Emirate, it is pivotal to the viability of the UAE. It also has extensive international investments."
TAQAs existing bonds fell after the guidance was released as investors made room for the new issue. TAQA's USD 500 million 6.165% 2017 maturity yield 4.51% up from 4.42% on Friday. The yield on its USD 1 billion 2016 maturity carrying a coupon of 5.875% rose to 3.974% on Monday from 3.682% on Friday.
(Sourced from Reuters)
