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TAQA Taps Malaysia Investors Via $215Mn Ringgit Issue

Abu Dhabi National Energy Company (TAQA) has issued sukuk worth 650mn Malaysian ringgits ($215mn) as part of a MYR3.5bn program it established in November last year. The move makes it the first non-financial institution in the MENA region to complete a ringgit sukuk issuance. The offering was expanded to MYR650mn from the originally planned MYR500mn due to strong demand, said the company. The 10-year sukuk has a profit rate of 4.65% with a full swapped rate to dollars of 5.3%. The pricing was 100 basis points (bps) over 10-year Malaysian mid swaps and the swapped dollar price is within the level TAQA was expected to secure in the markets. “We established the ringgit program to diversify our investor base so that we can establish pools of liquidity that are independent of the US dollar market. We chose the ringgit market because of the liquidity, the ease of setting up the program and the relationships we have established through non-deal roadshows in the past,” a TAQA spokesperson told MEES.

“This successful transaction opens up a new market and debt structure for TAQA. The significant demand, attractive pricing and speed of turnaround from the Malaysian market enhances our future financing flexibility and underlines the confidence of global markets in our business,” said TAQA’s Chief Financial Officer Stephen Kersley. The issue, which was all sold within Malaysia, saw strong interest from a diversified group of asset management companies and Islamic investors, said TAQA. Standard Chartered Saadiq Berhad acted as the lead arranger in this transaction.

The Sukuk are rated AA1 by Malaysia’s RAM Ratings, and had been given a provisional A3 from Moody’s Investors Service (MEES, 10 October 2011). Both Moody’s and Standard & Poor’s will publish final ratings on the sukuk, which are expected to be in line with TAQA’s other corporate bonds. This would put it at A3 for Moody’s and A- for S&P. TAQA will issue more paper under its MYR3.5bn program depending on its liquidity needs and market conditions, said the spokesperson. In December TAQA issued Regulation S/144a bonds, which allow them to be sold into Europe and the US respectively. The issue includes $750mn of bonds due in March 2017 at 4.125% and $750mn due in December 2021 at 5.875%.

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