Abu Dhabi's state oil firm ADNOC is beginning its first bond sale with a three-tranche dollar-denominated issuance on Wednesday, sources with knowledge of the matter told Bloomberg.
ADNOC is joining other major national oil companies in launching a bond sale this year, to take advantage of favorable borrowing costs that would fund development.
Earlier this week, ADNOC said that ADNOC Murban RSC, its wholly-owned, debt capital markets borrowing and rated entity, has established and launched a Global Medium Term Note (GMTN) program to raise debt from the capital markets.
Under the terms of the program, ADNOC Murban may issue notes in U.S. dollars or other currencies, over differing amounts and with various maturities, ADNOC said on Monday.
J.P. Morgan Securities plc and Morgan Stanley & Co. International plc jointly acted as dealers and arrangers of the Program. Abu Dhabi Commercial Bank PJSC, Citigroup Global Markets Limited, First Abu Dhabi Bank, HSBC Bank plc, BofA Securities, Mizuho International plc, and SMBC Nikko Capital Markets Limited also acted as dealers.
On Wednesday, Bloomberg's sources said that ADNOC Murban is issuing five-, 10-, and 30-year tranches of the bonds. The issuer will seek to raise 105 basis points over the U.S. Treasury curve for the five-year notes, 115 basis points above the Treasury curve for 10-year bonds, and 145 basis points over the curve for the 30-year tranche.
ADNOC is expected to disclose the final details of its first bond offering later on Wednesday.
Fitch Ratings assumes the company could raise up to $10 billion in the next four years. Based on contractual agreements with the group, ADNOC Murban's cash flow will be more than sufficient to service the debt it may raise, even under very conservative oil prices, Fitch said earlier this week, commenting on ADNOC's announcement of the Global Medium Term Note program.
Earlier this year, Saudi oil giant Aramco attracted orders worth a total $31 billion for a fresh bond sale whose size was $6 billion.
By Charles Kennedy for Oilprice.com
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