Abu Dhabi Water and Electricity Authority (Adwea) is planning to issue a bond to refinance the bank debt on the Shuweihat 2 independent water and power plant (IWPP).

The utility is currently looking to appoint a bank to arrange the bond issue and hopes to able to take the deal to the international capital market before the end of the year. Adwea has been considering using the capital markets to refinance the debt on the project since early 2011, but is now preparing to move ahead with the bond deal (MEED 25:3:11).

Adwea power deals
Project name Size ($m) Contract award date
Taweelah A2 1,470 1999
Taweelah A1 750 2000
Shuweihat 1 1,600 2,001
Taweelah B 3,000 2005
Fujairah 1 1,550 2006
Fujairah 2 2,800 2007
Shuweihat 2 3,200 2,008
Shuweihat 3 1,500 2,011
Source: MEED Insight

The Shuweihat 2 deal was financed in late 2009 with $2.2bn of debt consisting of a $1.1bn direct loan from export credit agency Japan Bank for International Cooperation (JBIC) and a $1.1bn loan from a group of 14 international and regional banks.

Pricing on the 2009 debt started at 260 basis points over the London interbank offered rate (Libor), rising to 350 basis points over the 22-year duration of the loans. Adwea hopes that it will significantly lower its financing costs through the bond issue. The utility is expected to target an issue size of around $500m with proceeds used to pay off some of the existing debt, the remainder of which will then have to be restructured and repriced.

Adwea has one of the region’s most successful track records in raising finance from the private sector for its projects. But the original Shuweihat 2 deal was done through one of the most difficult periods of the global financial crisis, and bankers say it is some of the most expensive financing Adwea has arranged.

A subsequent Adwea deal, for the Shuweihat 3 project, secured a $1.3bn debt package in May 2011 priced at 175 basis points above Libor, rising to 250 basis points.