Abu Dhabi’s TAQA completes $1.5bn dual-tranche bond sale

Integrated utilities company, the Abu Dhabi National Energy Company (TAQA), announced on Sunday the successful placement of an aggregate $1.5bn in 7-year and 30-year dual-tranche senior unsecured notes.

The 7-year notes, sized at $750m and maturing April 2028, were issued at a coupon rate of 2 per cent.

The 30-year notes, also sized at $750m and maturing April 2051, were issued at a coupon rate of 3.4 per cent.

The 30-year tranche is TAQA’s first Formosa issuance dual-listed in Taipei and London to tap into Taiwanese demand.

The order book was four times oversubscribed with strong demand from Asian investors setting the stage for further orders from MENA, Europe and the US.

The final order book of $6.1bn allowed the company to achieve significantly lower interest costs than on existing TAQA bonds.

The notes are rated Aa3 by Moody’s and AA- by Fitch, and the issuance was arranged and offered through a syndicate of joint lead managers and bookrunners, comprising of Bank of China, Citi, First Abu Dhabi Bank, HSBC, Mashreq, Mizuho Securities, and MUFG.

In a statement on its website, TAQA said that net proceeds from the sale of the notes will be used for general corporate purposes, including the repayment of outstanding debt.

In 2020, it reported revenue of Dhs4.2bn, a 31 per cent drop from the previous year. Earnings before interest, tax, depreciation and amortization also fell 71 per cent to Dhs700m.

Stephen Ridlington, TAQA’s group CFO, said that TAQA was able to achieve competitive funding rates that “will help lower our financing costs and support future growth. Achieving negative new issue premiums on both tranches sets a strong tone for the company and lays a solid foundation for future financing opportunities.”

In addition to the bond issuance, TAQA offered to buy back, for cash, all the $1.5bn of outstanding corporate bonds maturing in 2021 and up to $250m of the bonds maturing in January 2023, subject to customary conditions.

A total of $712m of the 2021 notes were tendered by investors, while the buyback of the 2023 notes continue. The buybacks were arranged by BNP Paribas, HSBC, MUFG and SMBC Nikko acting as joint dealer managers.

“We are delighted with the results of our first funding exercise following the transformational transaction with ADPower last year. The strong demand from global credit markets and investors from around the world is a strong vote of confidence in TAQA’s strengthened financial profile,” said Jasim Husain Thabet, TAQA’s group CEO and managing director.

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