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ABU DHABI / WAM
The Abu Dhabi National Oil Company (ADNOC) announced the successful issuance and closing
of a $3 billion bond, one of the largest non-sovereign bond offerings in the history of the Middle East. The bond, issued by ADCOP, an entity 100 percent owned by the ADNOC Group, highlights the more proactive and flexible management of ADNOC’s portfolio of assets and capital structure.
ADCOP owns an approximately 406 km pipeline that carries ADNOC Onshore’s crude oil from a collection centre in Abu Dhabi to the Fujairah oil export terminal, which provides access to international shipping routes. ADNOC Onshore is the leading onshore producer within the ADNOC Group. The pipeline is a key asset for the UAE’s oil industry, and, coupled with the strategic location of Fujairah, allows for a significant proportion of the UAE’s total crude oil production to be transported from Abu Dhabi directly to the Arabian Sea.
Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, said, “The very attractive pricing and substantial international demand for this offering positively reflects the UAE’s stable investment environment, as well as ADNOC’s new and progressive approach to its long-term financing strategy.†The pipeline has been operating since 2012, and in 2016 it had an average throughput of approximately 615,000 barrels per day.
The bond offering consists of two senior secured bond tranches: an $837 million, twelve year bullet bond tranche (Series A) and a $2,200 million, thirty year fully amortising bond tranche (Series B). The bond issuance was executed on favourable commercial terms with annual coupons of 3.65% and 4.6% for the Series A and B respectively. The expected stable oil throughput from ADNOC Onshore allowed ADNOC to issue long dated paper and the dual tranche structure enabled the targeting of different pools of investor demand while matching ADCOP’s cashflows.
The final geographic allocation for the twelve year tranche was 8 percent to Asian investors, 42 percent to European investors, 43 percent to US investors and 7 percent to investors from the MENA region. The final investor type allocation for the twelve year tranche was 8 percent to banks and private banks, 70 percent to fund managers and 22 percent to agencies, pensions, insurance and others. The final geographic allocation for the thirty year tranche was 10 percent to Asian investors, 35 percent to European investors, 51 percent to US investors and 4 percent to investors from the MENA region.