Earlier, lead arrangers released initial guidance on the
bond maturing in 2017 and 2021 and indicated both tranches would be
benchmark-sized, meaning at least $500 million each.
"The transaction will be for a maximum of $1.5
billion total between the two tranches," the spokesperson told Reuters in
an email.
TAQA, which is 75 percent owned by the government of Abu Dhabi,
last month said it would buy back a $1.5 billion bond maturing October 2012 and
enlisted four banks to sell new debt.
The company is a regular issuer of debt in global markets
and benefits from implicit backing from the Abu Dhabi government as one of its
strategic firms. Abu Dhabi holds over 90 percent of the UAE's oil reserves.
"As a government-controlled investment entity, and
as a provider of the bulk of power and water to the Emirate, it is pivotal to
the viability of the UAE. It also has extensive international
investments," said John Bates, head of fixed income at asset manager Silk
Invest.
"Demand should be strong for this deal."
Market sources said arrangers had received orders of over
$5 billion when books closed in Europe, Asia and the Middle East.
Guidance for the long five-year tranche maturing 2017 is
set at 350 basis points over 5-year US Treasuries and 412.5 bps over 10-year
Treasuries for the portion maturing 2021.
The indicated guidance correlates to a yield of around
4.45 percent for the 2017 tranche and about 6.18 percent for the 2021 maturity,
suggesting TAQA has had to pay a decent premium.
"Given the challenging environment, and also the
fact that TAQA is looking to raise a chunky amount from this transaction, the
premium which it is offering doesn't seem out of line," said Chavan
Bhogaita, head of markets strategy unit at National Bank of Abu Dhabi.
"And the fact that this deal is linked to the tender
offer means that the issuer needs to provide some incentive for investors to
sell out of the existing issue and buy into the new one."
TAQA's existing bonds fell after the guidance was
released, as investors made room for the new issue.
"The new ones look good, what remains to be seen is
investor appetite," said one regional fixed income trader.
TAQA's $500 million 6.165 percent 2017 maturity was
yielding about 4.5 percent on Monday, up from 4.42 percent on Friday, according
to Reuters data. The yield on its $1 billion 2016 maturity carrying a coupon of
5.875 percent rose to 3.944 percent on Monday from 3.682 percent on Friday.
Bank of America, RBS, Standard Chartered and Mitsubishi
UFJ are arranging the deal.
Last week, Qatar printed a $5 billion bond in a
three-tranche deal making it the biggest issue from the region this year.
Like Qatar, TAQA is also going for a Reg S/144a deal which
makes it open to institutional US investors.
"Abu Dhabi and Qatari credits are much sought-after,
even when the global pictures looks volatile," Silk Invest's Bates said.
