Abu Dhabi's Ipic 'aims to raise $2.9bn with bonds'

The International Petroleum Investment Company is preparing to return to the bond markets with plans to raise as much as $2.9 billion.

Ipic was set up in 1984 to invest in energy–related industries on behalf of the Abu Dhabi Government and has grown to hold stakes in companies such as OMV. REUTERS / Herwig Prammer

Abu Dhabi's International Petroleum Investment Company (Ipic) is preparing to return to the bond markets with plans to raise as much as US$2.9 billion (Dh10.65bn).

The investment company plans to issue a $750 million three-year dollar-denominated portion and a €1.65 billion (Dh7.85bn) offering, Reuters reported yesterday, citing arranging banks.

Ipic was set up in 1984 to invest in energy-related industries on behalf of the Abu Dhabi Government and has grown to hold stakes in companies such as OMV, the Austrian oil company and Spain's Cepsa.

The company was unavailable for comment yesterday.

Despite some high-profile debt restructurings across the Arabian Gulf following the 2008 financial crisis, international demand for well-rated regional debt sales remains strong as investors seek out attractive yields in emerging markets amid a low interest rate environment in Europe and the United States.

Overall debt sales across the region have topped $34.1bn this year, which means 2012 could yet eclipse the 2009 record of $36bn.

Ipic reported net profit of $697.2m in the six months ending June 2012 on sales of $26.34bn. It had total assets of more than $65.4bn, according to a prospectus filed with the London Stock Exchange on Monday.

Standard & Poor's this week assigned AA long-term debt ratings to the two proposed bond sales.

"The Abu Dhabi Government has declared its full and unconditional support for Ipic," S&P said in a report. "Therefore, we equalise the ratings on Ipic with those on Abu Dhabi because we believe that there is an almost certain likelihood that the Abu Dhabi Government would provide timely and sufficient extraordinary support to Ipic in the event of financial distress."

The debt sales of Abu Dhabi government-backed companies are among the most highly rated in the region because of the emirate's oil wealth and current account surplus. Borrowing costs of companies in the GCC have fallen sharply this year amid growing investor demand.

The yield on Ipic's 5.5 per cent dollar bonds maturing in March 2022 has fallen to 3.58 per cent, according to Bloomberg data.

Average yields on GCC company bonds fell to a record 3.53 per cent this month.