TAQA completes $1.5bn bond sale

TAQA completes $1.5bn bond sale
The company is also known as Abu Dhabi National Energy Company. (Shutterstock)
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Updated 02 May 2021

TAQA completes $1.5bn bond sale

TAQA completes $1.5bn bond sale
  • The seven-year notes, sized at $750 million and maturing April 2028, were issued at a coupon rate of 2 percent
  • The 30-year notes, also sized at $750 million and maturing April 2051, were issued at a coupon rate of 3.4 percent

DUBAI: Abu Dhabi energy giant TAQA said it completed a $1.5 billion bond sale that will help repay outstanding debt.
The company also known as Abu Dhabi National Energy Company, said the placement comprised seven-year and 30-year dual-tranche senior unsecured notes, in a stock exchange filing on Sunday.
The seven-year notes, sized at $750 million and maturing April 2028, were issued at a coupon rate of 2 percent. The 30-year notes, also sized at $750 million and maturing April 2051, were issued at a coupon rate of 3.4 percent, it said.
“The strong demand from global credit markets and investors from around the world is a strong 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 Jasim Husain Thabet, TAQA’s group CEO.
The 30-year tranche was TAQA’s first Formosa issuance dual-listed in Taipei and London to tap into Taiwanese demand.
The order book was four times oversubscribed with strong demand from Asian investors setting the stage for further orders from MENA, Europe and the US, it said.
The issuance was arranged and offered through a syndicate of joint lead managers and bookrunners comprising Bank of China, Citi, First Abu Dhabi Bank, HSBC, Mashreq, Mizuho Securities and MUFG.
In addition to the bond issuance, TAQA offered to buy back all the $1.5 billion of outstanding corporate bonds maturing in 2021 and up to $250 million of the bonds maturing in January 2023.


Air Seychelles sets final terms in Etihad debt row

Air Seychelles sets final terms in Etihad debt row
Updated 9 min 6 sec ago

Air Seychelles sets final terms in Etihad debt row

Air Seychelles sets final terms in Etihad debt row
  • Etihad sold its stake in Air Seychelles to the government for one dollar last month

NAIROBI: State-owned Air Seychelles will not pay more than $20 million to holders of bonds worth $72 million, a government official told Reuters, even though creditors have threatened to wind the African airline up if they are not paid in full.
The standoff is the latest twist in broader efforts by creditors to recover $1.2 billion owed by Abu Dhabi’s Etihad Airways and airlines it partly owned when the debt was issued in 2015 and 2016, such as Air Seychelles.
At the time, Etihad owned 40 percent of Air Seychelles and it was in a consortium along with the Gulf airline and other carriers that borrowed the money through special purpose vehicle EA Partners.
When the COVID-19 pandemic struck last year, Air Seychelles said it was struggling to honor its portion of the debt worth $71.5 million and it has been engaged in restructuring talks with a steering committee of creditors since July.
A senior government official from the Indian Ocean archipelago told Reuters it would not be able to offer bondholders more than $20 million to settle the debt.
“The $20 million which has been offered represents the upper limit with regards to the funding that Air Seychelles and/or the government of Seychelles can get approval for and successfully raise on the international market for settlement of the bond,” Patrick Payet, secretary of state for finance, said.
A committee of EA Partners creditors asked Air Seychelles last month to repay its debt, according to an EA Partners regulatory filing.
“Should Air Seychelles not comply ... the creditor will apply to the Supreme Court of Seychelles for an order that Air Seychelles be wound up,” the filing last month said.
The committee told Reuters this week it had rejected the $20 million offer but had not yet filed a winding-up petition to give the government a “grace period” to finalize a separate settlement with Etihad.
Etihad sold its stake in Air Seychelles to the government for one dollar last month and agreed to give it a 79 percent discount on the money it still owed the Gulf carrier, which is also about $72 million, Seychelles News Agency reported.
Creditors said it was unacceptable for Seychelles to offer financial investors a similar discount to the one it had received from Etihad, as the airline was a strategic shareholder.
Payet said that should creditors not accept the $20 million offer, the airline would have to consider other options, including insolvency and liquidation proceedings.
“It is the bondholders’ right to pursue legal options,” he said. “However, all our forecasts show in such an eventuality, the bondholders will recover significantly less than the $20 million currently on offer and it will take considerably longer to receive anything.”


KSA property market shows signs of post-virus recovery

KSA property market shows signs of post-virus recovery
Updated 23 min 32 sec ago

KSA property market shows signs of post-virus recovery

KSA property market shows signs of post-virus recovery
  • Resdiential mortgage growth supports sector
  • Retail stable despite upheaval across industry

RIYADH: Saudi Arabia’s real estate market has shown the first signs of a post-pandemic recovery, according to a report from broker Knight Frank.
It said that the outlook for the Kingdom’s real estate market was improving, supported by growth in residential mortgages.
Faisal Durrani, head of Middle East Research at Knight Frank, said: “Like other global economies, the pandemic has driven a widespread economic slowdown across the Kingdom. However, improved business confidence during the closing months of 2020, underpinned by economic reforms linked to Vision 2030 and the rapid response to COVID-19, has helped to drive a turnaround in performance in all main segments of the real estate market.”
In the grade A office market, rents experienced fragmented performance in the Kingdom’s three main centers, with rents in Riyadh increasing marginally by 0.5 percent to SR1,465 ($390.67) per square meter during the first quarter, while in Jeddah rents fell 2.8 percent to SR1,008 per square meter.
In Dammam, grade A office rents declined 4.3 percent to just over SR900 per square meter in the first three months of 2021.
The recent decision to exempt real estate transactions from a 15 percent value-added tax (VAT) charge has helped to boost activity in the residential market.
“The overall improvement in business confidence and market sentiment has led to a surge in residential mortgage loans, which rose by 38 percent in the 12 months to the end of February. That has, in turn, materialized in the form of a marked increase in residential transactions across the country, with Riyadh and Jeddah experiencing a 25 percent and 34 percent increase in deal numbers over the last 12 months,” Durrani said.
Despite the COVID-19 pandemic and retailers moving online, average vacancy rates in malls have remained stable. The market-wide vacancy rate in Riyadh increased by 1 percentage point in Q1 2021 to 16 percent.
Saudi Arabia has the world’s largest hotel construction pipeline, and the country’s supply is expected to increase by 61.1 percent over the next three years, the highest rate among the most 50 populated countries in the world, according to a report by hospitality data firm STR.
Durrani said: “The hospitality market has been somewhat of a bright spot. Despite continued weakness in Riyadh, Jeddah and the Dammam metropolitan area, these areas have experienced strong growth in both average daily room (ADR) rates, as well as revenue per available room.”
The resumption of the Umrah pilgrimage has underpinned performance in Jeddah’s hospitality market, where in the year to March 2021, ADRs grew by 18.7 percent, while occupancy decreased marginally by 2.2 percent.
Over this period, revenue per available room grew by 16.2 percent.


Saudi grocer Othaim sales dip a year on from panic buying supermarket sweep

Saudi grocer Othaim sales dip a year on from panic buying supermarket sweep
Updated 06 May 2021

Saudi grocer Othaim sales dip a year on from panic buying supermarket sweep

Saudi grocer Othaim sales dip a year on from panic buying supermarket sweep
  • VAT and school closures also hit performance
  • Global supermarket sector returns to normality

DUBAI: Saudi supermarket chain Abdullah Al Othaim Markets reported a 42 percent drop in first quarter profit, a year on from the early panic-buying days of the pandemic.
Net profit fell to SR57.7 million ($15.4 million) for the first three months of the year from almost SR100 million a year earlier, the company said in a Tadawul filing. Sales fell 11.9 percent over the same period to about SR2.1 billion.
The company said that the decline followed the “abnormal growth in retail sales as a result of high demand to buy groceries and food supplies,” following the coronavirus outbreak in the Kingdom last year. It also cited the closure of schools and an increase in value added tax as factors that weighed on its performance.
Supermarkets worldwide have benefited from a boom in grocery buying over the last year, especially at the start of the pandemic when supermarket shelves were stripped of essential items as consumers went in to panic buying mode. As restaurants and cafes closed their doors, many consumers compensated by buying more food to consume at home.
Now global supermarket chains are adjusting to the return of more normal consumer purchasing patterns as lockdowns are lifted and economies re-open.
Sainsbury’s CEO Simon Roberts said on Wednesday that that while customers shopping more normally would impact sales growth this year, the costs of the crisis would also fall.
“Like our customers, we are all looking forward to things feeling more normal over the coming months,” he said.


Saudi banks in a ‘sweet spot’ says fund manager

Saudi banks in a ‘sweet spot’ says fund manager
Updated 06 May 2021

Saudi banks in a ‘sweet spot’ says fund manager

Saudi banks in a ‘sweet spot’ says fund manager
  • Shareek program to boost corporate borrowing
  • Saudi banks well positioned with low cost of funding and deposits

DUBAI: Saudi banks are in a “sweet spot” to tap rising corporate and mortgage lending according to a top regional fund manager.
It comes after a rampant rise in the stock price of the Kingdom’s big lenders.
“I think Saudi banks in general are in a sweet spot,” Hedi Ben Mlouka, CEO and founder of FIM partners, told Bloomberg TV on Thursday. “You are seeing growth no longer coming from a low base, we are talking big numbers here that move the balance sheet and the profitability of these banks. The ‘Shareek’ program is going to spur the first growth we have seen in corporate borrowing to support all this capex,” he said.
The $2.7 trillion Shareek program was announced by the Saudi government last month and aims to provide incentives for publicly quoted companies to channel dividend payments into long-term investment in the Kingdom.
“The Saudi banks are in the best position to take advantage of that because their cost of funding and cost of deposits is low,” said Mlouka. “The Islamic banks are the best positioned from that perspective because they have the lowest cost of funding.”
Saudi banks have been among the best performers among regional publicly traded stocks in the first quarter, with the shares of Tadawul-listed lenders up by an average of 26 percent since the start of the year, according to Bloomberg data.
Saudi Arabia’s debt capital market is expected to grow as the Kingdom doubles down on its Vision 2030 goals, S&P Global Ratings said this week.
The Kingdom is banking on the increasing role of its debt and equities market in financing Vision 2030, the report said, as it seeks to attract more foreign direct investments.
“We think banks will continue to play an important role in financing Vision 2030, but foresee an increased role for the local capital market,” said S&P Global Ratings credit analyst Timucin Engin in the report published Tuesday.


Sadara first quarter profit surges on chemical prices increase, debt rejig

Sadara first quarter profit surges on chemical prices increase, debt rejig
Updated 06 May 2021

Sadara first quarter profit surges on chemical prices increase, debt rejig

Sadara first quarter profit surges on chemical prices increase, debt rejig
  • Q1 comprehensive income was SR2.04 billion vs. a loss of SR2.24 billion
  • Sadara booked a gain of SR1.05 billion on debt restructuring

DUBAI: Sadara Chemical Company reported a surge in profit in the first quarter as the price of its products increased and it booked a sizeable gain from the restructuring of its debts.
First quarter total comprehensive income rose to SR2.04 billion ($544 million) compared with a loss of SR2.24 billion in the year-earlier period and a profit of SR109 million in the fourth quarter of 2020, Sadara said in a filing to the Tadawul.
Revenue increased 80 percent year on year and 31 percent from the previous quarter to SR4.42 billion. Profit per share was SR0.44, compared with a loss of SR0.37 a year earlier.
The improved performance was attributed to “higher selling prices, continuous financial discipline, and the recognition of a modification gain of SR1.05 billion from debt re-profiling,” the company said.
Sadara, a joint venture between Saudi Aramco and Dow Chemical, joins other Tadawul-listed Saudi petrochemical producers in reporting a rebound in first-quarter profit.
The sector reported net profits of SR8.5 billion in Q1 compared with collective losses of SR3.2 billion over the same period in 2020, according to data from financial information website Argaam.
Saudi petrochemicals giant SABIC, which accounts for 57 percent of total earnings in the sector, last month reported that its Q1 profits had more than doubled to SR4.86 billion compared to the previous quarter and rebounding from a loss of SR1.05 billion in Q1 2020.
Nine petrochemical companies, including SABIC, were back in the black after reporting losses last year.
Saudi Aramco said in late March it restructured its debt financing for Sadara Chemical Company. The Saudi national oil company also said an agreement had been reached to allocate more natural gas feedstock to the joint venture, which has been building the world’s biggest chemical complex ever delivered in a single phase, in Jubail.
Sahara International Petrochemical Company (Sipchem), which had reported profit after Zakat and tax of SR451 million, said today it had delivered SR136 million in synergies in 2020, or 78 percent of its target in half the timeframe.
Saudi International Petrochemical Company completed its $2 billion merger with Sahara in May 2019. It has a goal of SR175 million of synergies by May 20222, it said in an investor presentation.