DUBAI: Abu Dhabi-owned International Petroleum Investment Co (IPIC) priced a dual-tranche dollar bond on Tuesday, the first from a fully government-controlled entity of the emirate this year and the latest from the region to tap strong investor demand.
The $1 billion five-year tranche was priced to yield 195 basis points over U.S. treasuries and the $1.5 billion 10-year tranche was priced to yield 245 basis points over U.S. treasuries, a source at an arranging bank said.
Price guidance for the 144a bond – open to U.S. investors – had been set at 200 basis points over treasuries and 250 points over treasuries for the five and ten year tranches respectively, tighter than early talk.
IPIC — which has stakes in Daimler and Virgin Galactic through its majority-owned Aabar Investments – has mandated six banks as bookrunners for the issue. These were HSBC, Standard Chartered, Royal Bank of Scotland, Bank of America Merrill Lynch, Goldman Sachs and National Bank of Abu Dhabi.
IPIC was established in 1984 with a mandate to invest globally in energy and energy related industries. At the end of June 30, its total assets were $48.2 billion, the prospectus for the bond showed.
There was a lack of bond issuance in the Gulf in the first nine months of the year as the global credit crisis and debt troubles at Dubai state conglomerate Dubai World sunk investor confidence.
However, improving market conditions and September’s agreement on Dubai World’s $25 billion restructuring has allowed local issuers to take advantage of low interest rates in the U.S. and high demand for paper from the region.
