x Abu Dhabi, UAETuesday 23 January 2018

Abu Dhabi's Taqa poised to tap bond market for at least $500m

Company seeks to raise funds after announcing it is buying BP oilfields in the North Sea for more than $1bn.

Taqa said on Wednesday it was buying some of BP's North Sea assets for over $1.3 billion.
Taqa said on Wednesday it was buying some of BP's North Sea assets for over $1.3 billion.

The Abu Dhabi National Energy Company, known as Taqa, is turning to the debt markets to raise cash the day after it announced the acquisition of BP oil assets in the UK’s North Sea worth US$1 billion (Dh3.67bn).

The government-controlled investor in power and energy projects has hired five banks to arrange a roadshow for a benchmark-sized bond, the finance houses said in a statement. A benchmark-sized bond is typically at least $500 million of debt.

The conditions for tapping fixed income funding are ideal, and Arabian Gulf issuers are flocking to the market to take advantage of low borrowing costs.

“There is a lot of appetite for high-grade issuance, especially from government-related issuers,” said Gus Chehayeb, director of Middle East and North Africa credit research at Exotix. “Taqa is tied to one of the strongest sovereigns, so there is going to be a lot of demand for a Taqa bond.”

The company hired Citigroup, HSBC, BNP Paribas, National Bank of Abu Dhabi and Standard Chartered to set up a series of meetings with investors in Asia, London and New York next week. A dollar-denominated issuance will follow “subject to market conditions”, said the banks.

International Petroleum Investment Company, another Abu Dhabi-owned investment fund, this week pushed GCC debt issuance to a new record with a $2.9bn bond, the Gulf’s largest corporate offering this year. A total of $37.4bn worth of debt has been issued in the GCC this year.

Taqa yesterday augmented its North Sea operations with majority stakes in the Harding and Devenick fields, and a minority interest in the Maclure field, all of which lie in the Central North Sea. The former BP assets will add 21,000 barrels per day (bpd) of production to its portfolio, boosting its global oil output to more than 60,000 bpd.

The Abu Dhabi company also produces gas in North America, and has invested in a gas storage project in Holland. The bulk of its assets lie in Abu Dhabi, where it holds a majority stake in all the power plants operating in the emirate. Taqa is listed on the Abu Dhabi Securities Exchange. Taqa regularly taps the bond market to finance its operations and acquisitions.

It has a cash position of $950m, and $4bn worth of unused credit facilities. Some $1.75bn of its fixed income matures next year. The company last issued debt last December with a $1.5bn refinancing.