Dubai: International Petroleum Investment Company (IPIC), an Abu Dhabi state-owned investor, plans to raise $2.9 billion in bonds, the biggest corporate sale in the Arab world this year, familiar with the matter said. The company, known as IPIC, plans to sell $750 million in three-year bonds and 1.65 billion euro-denominated ($2.14 billion) debt divided on two parts maturing between five-and-a-half years and 10-and-a-half years, said the people, who declined to be identified because details are private.
IPIC, which posted a 30 per cent drop in first-half profit to $818 million, has $17.3 billion of net debt outstanding and $3 billion of loans maturing next year, according to an investor presentation on its website. The company is considering a number of financing options for refinery and liquefied natural gas projects that include non-recourse project financing.
"We've seen how high the appetite is for Abu Dhabi paper this year and the hunger for yields, and that there's a lot of liquidity in the market," Haissam Arabi, chief executive officer of Dubai-based hedge fund Gulfmena Investments, said by telephone. Borrowing costs of companies in the six-nation Gulf Cooperation Council (GCC) have tumbled this year as the economies expanded and state-linked entities in Dubai restructured and paid debts.
The average yield on GCC company bonds dropped 169 basis points, or 1.69 percentage points, to a record 3.53 per cent on November 13, before trading at 3.6 per cent on Monday, HSBC/Nasdaq Dubai's GCC Conventional Corporate US Dollar Bond Index shows. IPIC may price the three-year dollar-denominated bonds in the range of 135 basis points to 140 basis points above the benchmark midswap range, according to the people.
The five-and-a-half years euro-denominated notes may be priced in the range of 145 basis points to 150 basis points above the benchmark rate, while the 10.5-year euro securities may be priced at 195 basis points to 200 basis points above midswaps, the people said. BNP Paribas SA, JPMorgan Chase, National Bank of Abu Dhabi, Natixis, Royal Bank of Scotland, and UniCredit are arranging the sale, the people said.