State-owned companies engage in bond issuances
Abu Dhabis Mubadala Development Company is said to be marketing a $500m seven-year bond to international investors.
The pricing is about 170 basis points (bp) over mid-swaps.
US-based Bank of America-Merrill Lynch and JPMorgan, Frances BNP Paribas and Societe Generale, the local First Gulf Bank, and Japans Mitsubishi UFJ are arranging the deal, according to a report by UK news agency Reuters.
Mubadala is rated Aa2 by the US Moodys Investors Service, AA by the US Standard & Poors and AA by the US Fitch Ratings, thanks to a high level of government support.
The investment company had revenues of AED34.1bn ($9.3bn) in 2015, and profits of AED1.2bn.
The return to the debt markets follows Abu Dhabis $5bn dual-tranche sovereign issuance. It issued a $2.5bn five-year bond priced at 85 bp over US treasuries, and a $2.5bn 10-year bond priced at 125 bp over treasuries. This has set a benchmark for pricing corporate issuance, allowing the firms to go ahead with debt plans.
Abu Dhabi National Energy Company (Taqa) has also invited banks to bid for a role in arranging an international bond issuance, according to Reuters. Taqa has been hit hard by falling oil prices and made a AED1.8bn loss in 2015, down from a loss of AED3bn in 2014. The firm is cutting costs sharply.
Taqa has denied reports it is considering selling assets to other state-owned Abu Dhabi entities.
Bond markets have been subdued in recent months due to high levels of volatility. Issuance is beginning to pick up, with higher pricing expectations.
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