Shuweihat 2 refinancing planned for second quarter

22 March 2012

Abu Dhabi utility to launch bank and bond refinancing

Abu Dhabi Water & Electricity Authority (Adwea) is set to launch the refinancing for its Shuweihat 2 in the coming weeks and is hoping to complete the deal in the second quarter.

The refinancing for the $2.2bn debt on the project is expected to consist of both a bond issue and a bank loan. Sources close to the process say that meetings with the existing lenders and plans to get a credit rating are already under way.

The existing debt is split between a $1.1bn direct loan by export credit agency Japan Bank for International Cooperation (JBIC) and a $1.1bn loan from a group of 14 international and regional banks.

The original deal was priced at 260 basis points over the London interbank offered rate (Libor), rising to 350 basis points over its 22-year duration. Adwea hopes to significantly lower its borrowing costs through the refinancing. The company has been planning to refinance the Shuweihat deal since early 2011.

If it does go ahead as a bond issue, it will be the first time that a regional utility has used the bond markets to refinance debts. Construction work on the project was completed earlier in March.

The UK’s HSBC has been appointed to arrange the financing, and the US’ Citigroup is also understood to have a role in the refinancing.

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