Taqa raises $1.5bn from dual tranche bond to fund expansion

Deal includes company's debut $1bn green bond issued under its green finance framework

Taqa announced its 2030 ESG strategy, which includes interim greenhouse gas emission reduction goals, late last year. Victor Besa / The National
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Abu Dhabi National Energy Company, better known as Taqa, has raised an aggregate $1.5 billion through dual tranche bond issuances, including its first green bond as it continues to invest in expansion and diversify its sources of funding.

Taqa, among the largest integrated utilities in the Europe, Middle East and Africa region, raised $1 billion from its debut green bond, net proceeds of which will be used for financing, refinance and investment in green projects, the company said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

The 10-year senior unsecured bond maturing in April 2033, carries a coupon of 4.696 per cent.

The five-year tranche of $500 million, maturing in January 2029, was issued as conventional bonds at a coupon rate of 4.375 per cent. Taqa plans to use the proceeds of the deal for general corporate purposes, it said.

The aggregate order book of both convention and green bond issuances reached almost $15 billion, as the deal was about 10 times oversubscribed.

The company received a “very strong demand from domestic, regional and international investors” for the notes, which are expected to be rated Aa3 by Moody’s and AA by Fitch, in line with the company’s corporate credit ratings, Taqa said.

“Taqa has yet again achieved competitive funding in our latest bond offering, which has attracted strong demand from investors across several capital markets,” Jasim Thabet, group chief executive and managing director, said.

Earlier this month, Taqa, launched its green finance framework for the issuance of green bonds, sukuks, loans and other debt instruments to support its net-zero goal.

The company plans to use proceeds from such deals for “eligible green projects”, including renewable energy, energy efficiency, sustainable water and wastewater management, clean transportation and terrestrial and aquatic biodiversity, it said at the time.

Projects financed under the framework will contribute to the company's 2030 environmental, social and governance (ESG) targets and its goal of achieving net zero by 2050, in line with the UAE's ambitions.

Taqa announced its 2030 ESG strategy, which includes interim greenhouse gas emission reduction goals, late last year.

“Taqa’s clear ESG strategy and decarbonisation agenda has enabled us to complete our first-ever green bond … and allows us to cater to the growing demand for investors seeking credible green investment opportunities,” Mr Thabet said.

“In the Year of Sustainability, Taqa is demonstrating how utility companies can have ambitious growth targets and prioritise solid returns, whilst working towards a net zero future.”

Taqa’s latest bond issuance was arranged and offered through a syndicate of joint lead managers and bookrunners including BNP Paribas, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, Industrial and Commercial Bank of China, IMI-Intesa Sanpaolo, Scotiabank, SMBC Nikko and Standard Chartered.

Established in 2005, Taqa has investments in power and water generation, transmission and distribution assets, as well as upstream and midstream oil and gas operations.

Its assets are spread across the UAE, Saudi Arabia, Canada, Ghana, India, Iraq, Morocco, Oman, the Netherlands, the UK and the US.

In December, Taqa, Mubadala Investment Company and Adnoc completed a deal to become shareholders in Abu Dhabi's clean energy company Masdar. The move will help Taqa reach its 2030 target of having more than 30 per cent of its generation portfolio come from renewables.

Taqa has committed to a 25 per cent reduction of scope 1 and 2 (direct and indirect) emissions by 2030, including a 33 per cent reduction of UAE portfolio emissions, compared to the 2019 baseline.

The company has also committed to expanding its share of renewables to at least 30 per cent of total generation capacity by 2030.

Taqa reported a 35 per cent rise in its 2022 net profit to Dh8.03 billion ($2.19 billion) after its oil and gas business surged amid rising commodity prices.

Updated: April 18, 2023, 7:18 AM