The Arab Energy Fund raises $650m in oversubscribed bond issuance

The Arab Energy Fund, formerly known as APICORP, has successfully issued a $650m five-year senior unsecured bond under its Global Medium-Term Note Program, marking a landmark transaction for the multilateral financial institution.

The bond, rated Aa2 (Stable) by Moody’s and AA+ (Stable) by Fitch, was priced at SOFR Mid-Swap (MS) +80 basis points (bps), yielding 4.900 per cent.

Strong investor demand allowed The Arab Energy Fund to increase the issuance from an initial $500m to $650m, with final book orders exceeding $935m.

The issuance, which settled on February 26, was priced at the tighter end of similarly rated supranational, sovereign, and agency (SSA) peers and inside the fund’s existing yield curve.

Arab Energy Fund sukuk issuance: details

Investor participation was well-diversified, with an oversubscription rate of 1.4 times.

Central banks, sovereign institutions, financial institutions, and real money managers accounted for the bulk of demand.

Approximately 40 per cent of the order book came from outside the MENA region, including strong interest from Asia, Europe, and offshore US investors.

Geographic allocations stood at 60 per cent for MENA, 25 per cent for Asia/other, and 15 per cent for Europe.

By investor type, 52 per cent was allocated to banks, treasuries, and private banks, 38 per cent to central banks, sovereigns, and institutions, and 10 per cent to asset managers, fund managers, and hedge funds.

The successful issuance underscores The Arab Energy Fund’s robust credit profile and reinforces investor confidence in its strategic role within the global energy sector.

The transaction enhances the fund’s liquidity position and strengthens its presence in international capital markets.

BSF Capital, Doha Bank, First Abu Dhabi Bank, Mashreq, Nomura, and Standard Chartered acted as joint lead managers and book runners for the issuance.