Taqa raises $1.5bn in bond sale to fund low-carbon growth and pay down debt
Abu Dhabi National Energy Company, or Taqa, raised $1.5 billion through a dual-tranche bond issue to fund its low-carbon growth plans and buy back part of its outstanding corporate bonds.
The company raised debt through two $750 million tranches. The first, a seven-year note, carries an interest rate of 2 per cent, the lowest Taqa has achieved on its bond sales, the company said yesterday in a filing to the Abu Dhabi Securities Exchange.
The second, a longer 30-year tranche, has a coupon rate of 3.4 per cent and is Taqa’s first Formosa bond that has been listed jointly in Taipei and London to tap demand from Taiwanese investors.
“The strong demand from global credit markets and investors around the world is a ... vote of confidence in Taqa’s strengthened financial profile, as well as the company’s strategy to become a low-carbon power and water champion in the UAE and beyond,” said group chief executive Jasim Thabet.
He said he was confident the company would go from strength to strength, demonstrating why it and the UAE utilities sector are compelling opportunities for investors.
The order book for the bond issue was four times oversubscribed, with strong demand from Asian investors. This allowed the company to achieve significantly lower interest costs than on existing debt.
It was arranged through a syndicate of joint lead managers and bookrunners including Bank of China, Citi, First Abu Dhabi Bank, HSBC, Mashreq, Mizuho Securities and MUFG.
Taqa said part of the net proceeds will be used for the repayment of outstanding debt. The company offered to buy back, in cash, outstanding corporate bonds worth $1.5bn that mature this year and debt instruments valued at $250m that mature in January 2023.
It said bonds worth $712m that mature this year were “tendered by investors while the buyback of the 2023 notes continues”.
BNP Paribas, HSBC, MUFG and SMBC Nikko arranged the buy-back deals, said Taqa.
This is the first international bond offering by Taqa since it completed a transaction with the Abu Dhabi Power Corporation to create one of the largest utilities in Africa, Europe and the Middle East. The deal, effectively a reverse takeover, resulted in ADPC transferring assets worth Dh120bn to Taqa in return for shares, giving it a 98.6 per cent stake in the company.
In March, the company announced a 2030 strategy that involves investing Dh40bn in infrastructure development as it looks to add about 27 gigawatts of power capacity and expand its renewables portfolio.
Taqa, which is rated “Aa3” by Moody’s Investors Service and “AA-” by Fitch Ratings, plans to expand its power-generation capacity in the UAE from 18 gigawatts to 30 gigawatts and boost its global generating capacity by 15 gigawatts.
“With our long-term growth plans and firm financial stewardship, we remain committed to maintaining strong investment grade credit ratings on a stand-alone basis,” said group chief financial officer Stephen Ridlington.
The order book for the bond issue was four times oversubscribed, with strong demand from Asian investors