Abu Dhabi investment vehicle International Petroleum Investment Co (IPIC) plans to issue a dual-tranche, benchmark-sized dollar-denominated bond, according to lead arrangers, for debt repayment and general corporate purposes.
The bond is expected to price later on Thursday, one source at an arranging bank said. A benchmark-sized issue is usually understood to mean at least $500 million in value.
Initial price talk for the long five-year tranche maturing 2017 was at about 275 basis points over US Treasuries and about 325 basis points over UST for the long 10-year tranche, maturing 2022.
Traders said initial price talk indicated a significant new- issue premium, although final guidance is expected to tighten ahead of issue.
"The deal will attract investors, but I think it will reset the whole curve for Abu Dhabi now, say if Mubadala or any others who want to tap the market. Pricing should definitely tighten before the issue," said one regional fixed income trader.
IPIC, which has stakes in Spain's Cepsa and Austrian oil group OMV , concluded roadshows in New York on Wednesday, having kicked off investor meetings in Germany on October 19.
Barclays Capital , JP Morgan , Mitsubishi UFJ Securities , Natixis and Societe Generale arranged the meetings and IPIC has picked Goldman Sachs as global coordinator, an earlier mandate announcement said.
Any issue from the AA-rated borrower could help reopen the international debt market for Gulf issuers, after a three-month drought caused by unstable markets globally.
A regular bond issuer, IPIC has an unlimited global medium term notes programme and last tapped international bond markets with a $4 billion-equivalent, three-tranche euro- and sterling-denominated issue in March, believed to finance its acquisition of Cepsa.
The company, mandated to invest in the energy sector globally on behalf of the Abu Dhabi government, had $61.8 billion in total assets at June 30, its financial statements showed. Total debt stood at $31.8 billion.
In June, IPIC launched a $1.5 billion, 18-month bridge financing facility, and in September it borrowed Dh7.3 billion ($2 billion) to lend to its subsidiary Aabar Investments for the purchase of a stake in Malaysia's RHB. That loan is thought to have a one-year maturity.
IPIC's first-half profit nearly tripled as it posted gains on its financial investments, an updated bond prospectus showed.
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