State-owned Energy Company Raises New Funds

State-owned Energy Company raises new funds through sale of 10-year Islamic bonds at 4.65 per cent yield. Abu Dhabi National Energy Co (TAQA) raised $215 million from the sale of a Malaysian ringgit-denominated Islamic bond, or sukuk, it said, as part of plans by the state-run oil and gas utility to diversify its funding sources.

The ten-year sukuk carried a 4.65 per cent profit rate with a full swapped rate to US dollars of 5.3 per cent, the company, which owns assets in Canada and Europe, said in a statement.

TAQA, which is 75 per cent, owned by the government of Abu Dhabi, upsized the bond from 500 million to 650 million ringgits, due to strong investor demand from Malaysian asset management companies and Islamic investors, the company said.

The sukuk was part of the firm's 3.5 billion Malaysian ringgit sukuk programme, which was established late last year. Gulf borrowers are tempted to explore financing options in Malaysia to diversify funding sources away from dollar financing and to tap into an Islamic investor base.

National Bank of Abu Dhabi and Abu Dhabi Commercial Bank have both issued in ringgit previously, in response to high demand from Malaysian investors looking to gain international exposure in local currency.

"This successful transaction opens up a new market and debt structure for TAQA," Stephen Kersley, chief financial officer of TAQA said in the statement. Standard Chartered was the lead arranger for the sukuk.

Earlier this month, Malaysia's RAM Ratings assigned a preliminary AA1 rating to TAQA's proposed sukuk Murabahah programme of up to 3.5 billion ringgit.

In December, TAQA sold $1.5 billion in bonds maturing in five to ten years to refinance upcoming debt. Abu Dhabi listed TAQA is a regular issuer of debt in global markets and benefits from implicit backing from the Abu Dhabi government as one of its strategic firms. The emirate holds over 90 per cent of the UAE's oil reserves.