Adnoc is looking to optimise its balance sheet with a number of different financing options being considered. Mona Al Marzooqi / The National
Adnoc is looking to optimise its balance sheet with a number of different financing options being considered. Mona Al Marzooqi / The National

Adnoc active on the debt front as it pushes ahead with transformation strategy



The Abu Dhabi National Oil Company is studying a number of fund raising options at both group and asset level that will help unlock value and optimise the group's balance sheet as it pushes ahead with its new approach to drive growth.

Adnoc is in discussions with banks for a club loan of approximately US$5 billion that will be used for ongoing corporate activities. It is also looking into financing options for select midstream infrastructure assets including potentially tapping debt capital markets via a bond issuance. Plans are at an early stage so the size and scope of any potential bond issuance has not been decided. The company said it has no intention to issue bonds at the holding or main operating company levels such as Adco, Adma-Opco and Zadco.

“Considering its very low gearing ratios, Adnoc is taking a more active approach to managing its capital structure to unlock value, raise long term capital, enhance returns and drive growth,” a company spokesman said. “Adnoc is therefore considering various options with regard to the potential use and issuance of debt.”

The potential new external financing – which would be Adnoc's first apart from a Dh12bn loan from Japanese banks agreed in 2016 - is part of the transformation strategy implemented by chief executive Sultan Al Jaber, who took on the role last year with a mandate to make Adnoc more efficient and much more performance-driven, similar to a modern international energy company.

In just over a year, its offshore operations are going through a consolidation, the integration of its shipping and marine services has begun, procurement has been centralised at group level, the operation of some of its non-core operations has been outsourced to the UAE private sector and a new management performance system has been introduced. The company’s headcount and structure has also been streamlined.

Adnoc is now opening up for new partnerships and co-investments, for the first time across all areas of the group – not just in oil & gas concessions and petrochemicals but also in drilling, pipelines, storage and refining – and potential partners include international pension funds, private equity investors and global infrastructure specialists.

Since it articulated its new approach last month, Adnoc said it has "noticed a considerable amount of inbound enquiries and in particular around our energy infrastructure venture we announced".

Anita Yadav, head of fixed income research at Emirates NBD, said that investors are unlikely to get materially concerned with Adnoc injecting some debt into its capital structure.

“In the long run, debt is a cheaper form of funding than the equity and therefore some amount of debt makes the capital structure more efficient for a corporate,” she said. “The level of optimum gearing can be anywhere from 0 per cent to 100 per cent (debt/equity) or higher, without investors getting concerned or worried about leverage, depending on which industry the company operates in.”

Given the Emirate of Abu Dhabi’s high-grade credit rating – Fitch puts Abu Dhabi’s long-term foreign and local currency issuer default ratings at AA – and Adnoc’s central contribution to its fiscal strength, any debt issued by the company should attract “fine pricing” and significant interest, said Ms Yadav.

Krisjanis Krustins, an associate director in Fitch’s sovereign team confirmed that the agency typically sees “any debt of a state-owned entity as a contingent liability of the government, irrespective of whether any explicit guarantees are provided”. This is likely to mean that Adnoc – which is not subject to any individual corporate rating – will benefit from favourable borrowing terms in accordance with Abu Dhabi’s strong credit profile.

STAR WARS JEDI: SURVIVOR

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Consoles: PC, Playstation 5, Xbox Series X and S
Rating: 4/5

If you go

  • The nearest international airport to the start of the Chuysky Trakt is in Novosibirsk. Emirates (www.emirates.com) offer codeshare flights with S7 Airlines (www.s7.ru) via Moscow for US$5,300 (Dh19,467) return including taxes. Cheaper flights are available on Flydubai and Air Astana or Aeroflot combination, flying via Astana in Kazakhstan or Moscow. Economy class tickets are available for US$650 (Dh2,400).
  • The Double Tree by Hilton in Novosibirsk (+7 383 2230100,) has double rooms from US$60 (Dh220). You can rent cabins at camp grounds or rooms in guesthouses in the towns for around US$25 (Dh90).
  • The transport Minibuses run along the Chuysky Trakt but if you want to stop for sightseeing, hire a taxi from Gorno-Altaisk for about US$100 (Dh360) a day. Take a Russian phrasebook or download a translation app. Tour companies such as Altair-Tour (+7 383 2125115 ) offer hiking and adventure packages.
The nine articles of the 50-Year Charter

1. Dubai silk road

2.  A geo-economic map for Dubai

3. First virtual commercial city

4. A central education file for every citizen

5. A doctor to every citizen

6. Free economic and creative zones in universities

7. Self-sufficiency in Dubai homes

8. Co-operative companies in various sectors

­9: Annual growth in philanthropy

If you go

Flights

Emirates flies from Dubai to Phnom Penh with a stop in Yangon from Dh3,075, and Etihad flies from Abu Dhabi to Phnom Penh with its partner Bangkok Airlines from Dh2,763. These trips take about nine hours each and both include taxes. From there, a road transfer takes at least four hours; airlines including KC Airlines (www.kcairlines.com) offer quick connecting flights from Phnom Penh to Sihanoukville from about $100 (Dh367) return including taxes. Air Asia, Malindo Air and Malaysian Airlines fly direct from Kuala Lumpur to Sihanoukville from $54 each way. Next year, direct flights are due to launch between Bangkok and Sihanoukville, which will cut the journey time by a third.

The stay

Rooms at Alila Villas Koh Russey (www.alilahotels.com/ kohrussey) cost from $385 per night including taxes.

Salah in numbers

€39 million: Liverpool agreed a fee, including add-ons, in the region of 39m (nearly Dh176m) to sign Salah from Roma last year. The exchange rate at the time meant that cost the Reds £34.3m - a bargain given his performances since.

13: The 25-year-old player was not a complete stranger to the Premier League when he arrived at Liverpool this summer. However, during his previous stint at Chelsea, he made just 13 Premier League appearances, seven of which were off the bench, and scored only twice.

57: It was in the 57th minute of his Liverpool bow when Salah opened his account for the Reds in the 3-3 draw with Watford back in August. The Egyptian prodded the ball over the line from close range after latching onto Roberto Firmino's attempted lob.

7: Salah's best scoring streak of the season occurred between an FA Cup tie against West Brom on January 27 and a Premier League win over Newcastle on March 3. He scored for seven games running in all competitions and struck twice against Tottenham.

3: This season Salah became the first player in Premier League history to win the player of the month award three times during a term. He was voted as the division's best player in November, February and March.

40: Salah joined Roger Hunt and Ian Rush as the only players in Liverpool's history to have scored 40 times in a single season when he headed home against Bournemouth at Anfield earlier this month.

30: The goal against Bournemouth ensured the Egyptian achieved another milestone in becoming the first African player to score 30 times across one Premier League campaign.

8: As well as his fine form in England, Salah has also scored eight times in the tournament phase of this season's Champions League. Only Real Madrid's Cristiano Ronaldo, with 15 to his credit, has found the net more often in the group stages and knockout rounds of Europe's premier club competition.

UAE currency: the story behind the money in your pockets
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Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

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