Mubadala Development raises US$1.5 billion in two-part bond sale

Mubadala Development Company said it raised US$1.5 billion via a two-part international bond sale earlier this week, which will be one of its last financing before it officially merges with International Petroleum Investment Company (Ipic) in May.

Mubadala is an Abu Dhabi government-owned strategic fund charged with making investments that will further the emirate’s economic development. It sold $850 million of bonds maturing in seven years and another $650m bonds maturing in 12 years, to “a div­ersified international investor base, [after being] greater than three times oversubscribed … at very competitive price”.

Mubadala is considered by bond rating agencies to have the implicit backing of the ­government and carries an “investment grade” rating parallel to that of its parent of AA/Aa2. The company said the seven and 12-year bonds carried annual interest rate coupons 3 per cent and 3.75 per cent, respectively.

It did not say at what price they were sold, but typically underwriters buy them at a couple of points discount to par and then sell them on to pension funds and similar institutions.

Mubadala first sold bonds in 2009 and returned to the international bond market last May with a $500m issue.

When the merger was announced in June, Mubadala had outstanding debt of nearly $12bn, about $2.6bn of which was in bonds. Ipic had $30bn debt, of which about $6.5bn was bonds. Ipic bonds have paid a slightly higher interest rate than Mubadala’s despite both being government-owned. The new entity, which will be called Mubadala Investment Company, will have total assets of about $125bn. The merger of their finance departments and setting a new debt management strategy will take about a year.

The new merged entity is likely to have lower reliance on external funding as Ipic’s positive cash flow – which has been running at an annual $3bn to $5bn – will meet some of Mubadala’s future funding needs.

Its positive cash flow has typically been about half Ipic’s, requiring less debt, said Anita Yadav, the head of fixed-income research at Emirates NBD.

Six banks shared the underwriting/sales duties for Tuesday’s bond offering: Barclays, HSBC, Natixis, National Bank of Abu Dhabi (now known as First Abu Dhabi Bank), SMBC Nikko and Standard Chartered.

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Day 1, Abu Dhabi Test: At a glance

Moment of the day Dimuth Karunaratne had batted with plenty of pluck, and no little skill, in getting to within seven runs of a first-day century. Then, while he ran what he thought was a comfortable single to mid-on, his batting partner Dinesh Chandimal opted to stay at home. The opener was run out by the length of the pitch.

Stat of the day – 1 One six was hit on Day 1. The boundary was only breached 18 times in total over the course of the 90 overs. When it did arrive, the lone six was a thing of beauty, as Niroshan Dickwella effortlessly clipped Mohammed Amir over the square-leg boundary.

The verdict Three wickets down at lunch, on a featherbed wicket having won the toss, and Sri Lanka’s fragile confidence must have been waning. Then Karunaratne and Chandimal's alliance of precisely 100 gave them a foothold in the match. Dickwella’s free-spirited strokeplay meant the Sri Lankans were handily placed at 227-4 at the close.


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