Abu Dhabi wealth fund ADQ sells $2bn bond

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Abu Dhabi sovereign wealth fund ADQ sold a $2bn two-tranche bond on Wednesday, fixed income news service IFR reported, with investor appetite strong for its second debt sale this year.

ADQ, formally known as Abu Dhabi Developmental Holding, sold a $1bn 7-year tranche at 85 basis points (bps) over US Treasuries (UST), and a $1bn 30-year tranche at 120 bps over, narrower than earlier guidance after order books topped $8bn.

READ MORE: Abu Dhabi’s ADQ to acquire minority stake in Sotheby’s

Abu Dhabi’s smallest, but still sizeable, wealth fund raised $2.5bn through its debut bond sale in April, with strong demand from global investors allowing it to tighten pricing at launch.

ADQ had $225bn in assets under management at the end of June, according to an investor presentation seen by Reuters.

ADQ diversification

The initial bond sale was intended to help diversify ADQ’s funding sources for future acquisitions, a person familiar with the matter told Reuters at the time.

In August, the fund said it was jointly investing $1bn in Sotheby’s along with the latter’s owner Patrick Drahi which would give ADQ minority ownership of the auction house.

ADQ is fully owned by the Abu Dhabi government, which holds more than 90 per cent of the United Arab Emirates’ oil reserves, and has centred its investment focus primarily on domestic and regional assets so far.

Established in 2018, it holds a broad portfolio including energy and utilities, food and agriculture, healthcare and others.

Abu Dhabi has accelerated efforts to diversify its economy away from hydrocarbons, leaning on its vast wealth and sovereign funds to boost non-oil growth, develop national champions and attract foreign investment.

Abu Dhabi Commercial Bank (ADCB), BofA Securities, Bank of China, BNP Paribas, First Abu Dhabi Bank, JPMorgan and Mizuho are acting as joint global coordinators and joint bookrunners for Wednesday’s bond sale.