UAE state oil giant ADNOC issues first bond

Abu Dhabi’s state oil firm ADNOC is starting its first bond sale on Wednesday with a three-tranche dollar issue, sources familiar with the matter told Bloomberg.

ADNOC joins other major national oil companies in launching a bond sale this year to take advantage of favorable borrowing costs that would finance the development.

Earlier this week, ADNOC said ADNOC Murban RSC, its wholly-owned debt capital markets borrower and rated, established and launched a Global Medium Term Note (GMTN) program to raise debt from the capital markets.

Under the terms of the program, ADNOC Murban can issue notes in US dollars or other currencies, over different amounts and with different maturities, ADNOC said on Monday.

JP Morgan Securities plc and Morgan Stanley & Co. International plc acted jointly as dealers and arrangers of the Programme. Abu Dhabi Commercial Bank PJSC, Citigroup Global Markets Limited, First Abu Dhabi Bank, HSBC Bank plc, BofA Securities, Mizuho International plc and SMBC Nikko Capital Markets Limited also acted as dealers.

On Wednesday, Bloomberg sources said ADNOC Murban is issuing 5-, 10- and 30-year bond tranches. The issuer will seek to raise 105 basis points above the US Treasury curve for five-year notes, 115 basis points above the 10-year Treasury curve and 145 basis points above the curve for the 30-year tranche.

ADNOC is expected to unveil final details of its first bond offering later on Wednesday.

Fitch Ratings assumes the company could raise up to $10 billion over the next four years. Based on contractual arrangements with the group, ADNOC Murban’s cash flow will be more than sufficient to service the debt it can raise, even with very conservative oil prices, Fitch said earlier this week, commenting on ADNOC’s announcement of the Global Medium Term Note programme.

Earlier this year, Saudi oil giant Aramco attracted orders totaling $31 billion for a new $6 billion bond sale.

By Charles Kennedy for Oilprice.com

More top reads from Oilprice.com