The Arab Petroleum Investments Corporation (Apicorp), a multilateral lender, raised $750 million (Dh2.75 billion) through the issuance of a five-year bond at record low rates.
The bonds were issued under Apicorp's $3bn Global Medium-Term Note (GMTN) programme and will be used to allow the lender to take a "countercyclical role in 2020", allowing it to support the Mena region's energy sector at a time when it has been hit by falling demand due to the coronavirus pandemic and lower oil prices.
“The issuance attracted robust and diverse investor demand, with more than $1.1bn in orders for the debt sale from over 40 investors," the Dammam-based lender said in a statement, adding that investors came both from within and outside the Mena region.
The five-year note gives the lender a fixed cost of funding of 1.46 per cent, the lowest it has ever achieved.
"Moreover, the spread of 110bps is the lowest in the region compared to the sovereign, semi-sovereign and MDB [multilateral development bank] peers' US dollar issuances that came to the market since the Covid-19 outbreak," it added.
Apicorp is owned by the 10 members of the Organisation of Arab Petroleum Exporting Countries, including Saudi Arabia, the UAE, Kuwait, Libya, Iraq, Qatar, Algeria, Bahrain, Egypt and Syria. It was set up in 1975 to extend financial support to Arab countries in the energy sector."Despite challenging market conditions, the successful issuance of this benchmark US dollar bond, with this level of competitive pricing, reflects the confidence that global investors have in Apicorp," Dr Ahmed Ali Attiga, chief executive of Apicorp, said. "More than 50 per cent of the investors for this issuance are central banks and official institutions, both from within and outside the region."
In April, it rolled out a $500m support package to help clients in the energy sector continue funding projects in the wake of the pandemic, as both prices and demand for oil fell.
The funds would be deployed to support sustainable, impact-driven utilities, renewables and petrochemicals projects, Apicorp said at that time.
The lender also increased its callable capital to $8.5bn from $1bn to boost investments in the energy sector and increased its authorised capital to $20bn, from $2.4bn previously. Its subscribed capital increased to $10bn, up from $2bn. Callable capital is the amount the lender can call from shareholders, but which has not yet been paid.
Apicorp was advised on the bond issue by Citibank, Emirates NBD, Goldman Sachs and Standard Chartered.
The bond market in the GCC is expected to remain resilient despite the coronavirus pandemic, with issuance from the region likely to top $100bn this year, according to a report in April from Franklin Templeton.
