Abu Dhabi National Energy Company, or Taqa, raised $1.5 billion through a dual-tranche bond issue to fund its low-carbon growth plans and buy back some of its outstanding corporate bonds.
The company raised debt through two $750 million tranches. A seven-year note has an interest rate of 2 per cent, the lowest Taqa has achieved on its bond sales, the company said in a statement on Sunday to the Abu Dhabi Securities Exchange. A longer 30-year tranche has a coupon rate of 3.4 per cent and is Taqa's first Formosa bond, listed jointly in Taipei and London to tap demand from Taiwanese investors.
“The strong demand from global credit markets and investors from around the world is a … vote of confidence in Taqa’s strengthened financial profile as well as the company’s strategy to become a low-carbon power and water champion in the UAE and beyond,” Jasim Husain Thabet, Taqa’s group chief executive, said.
“I am confident that we will continue to go from strength to strength, demonstrating why Taqa, and the utilities sector in the UAE, is a compelling opportunity for investors.”
This is the first international bond offering by Taqa since completing its transaction with Abu Dhabi Power Corporation to create one of the largest utility companies in Europe, the Middle East and Africa. The deal, effectively a reverse takeover, resulted in ADPC transferring assets worth Dh120bn to Taqa in return for shares, giving it a 98.6 per cent stake in the company.
The order book for the bond issuance was four times oversubscribed with strong demand from Asian investors, allowing the company to achieve significantly lower interest costs than on existing debt.
It was arranged through a syndicate of joint lead managers and bookrunners including Bank of China, Citi, First Abu Dhabi Bank, HSBC, Mashreq, Mizuho Securities and MUFG.
Taqa said part of the net proceeds from the deal will be used for the repayment of its outstanding debt.
Taqa is offering to buy back for cash all of its $1.5bn of outstanding corporate bonds maturing in 2021 and up to $250 million of debt instruments maturing in January 2023.
A total of $712m of the 2021 bonds were “tendered by investors whilst the buyback of the 2023 notes continues”, the company said. BNP Paribas, HSBC, MUFG and SMBC Nikko arranged the buyback deals, the company said.
In March, Taqa announced a 2030 strategy that involves investing Dh40bn in infrastructure development as it looks to add about 27 gigawatts of power capacity and expand its renewables portfolio.
Taqa, which is rated Aa3 by Moody’s Investors Service and AA- by Fitch Ratings, plans to expand its power-generation capacity in the UAE from 18 gigawatts to 30 gigawatts and boost its global generating capacity by 15 gigawatts.
“With our long-term growth plans and firm financial stewardship, we remain committed to maintaining strong investment grade credit ratings on a standalone basis,” Stephen Ridlington, Taqa’s group chief financial officer, said.