DUBAI - Abu Dhabi National Oil Company's newly set up debt-issuing unit, ADNOC Murban, began holding investor meetings on Tuesday ahead of its debut bond sale expected this year, an investors' note seen by Reuters showed.

The meetings, coordinated by JPMorgan and Morgan Stanley, will run through Friday and will target investors in Asia, Europe, the United States, and the Middle East and Africa, according to the note.

ADNOC and JPMorgan did not respond to emailed requests for comment. Morgan Stanley declined to comment.

The ability to tap the debt capital markets will give ADNOC flexibility to raise debt with longer tenors and potentially better pricing.

In an investor presentation reviewed by Reuters, ADNOC Group's chief investment officer said ADNOC has traditionally financed itself with equity and limited use of bank loans.

"We think it's useful for modern treasury to add access to the debt capital markets to our financing toolkit, to complete the set of instruments available to us," CIO Klaus Froehlich said.

Regional peer Saudi Aramco issued its debut bonds in April 2019, raising $12 billion ahead of its record $29.4 billion initial public offering. Qatar Energy also raised $12.5 billion in last year's largest bond sale out of emerging markets.

"For clarity, we do not intend to access the markets in the same way our regional peers have done with a jumbo inaugural debt offering. More likely, we will be accessing the market in sizes of around $3 to $5 billion per annum," Froehlich said.

Proceeds from the upcoming bond sale will be used to refinance loans, he said. ADNOC has $6 billion in loans maturing this year and $10 billion over the following three years.

"But, just so that you understand, we just paid back a $3 billion bank line in cash, so this bond programme is not necessarily a necessity to refinance bank loans, but a proactive move in order to build a curve," Froehlich said.

Investors have previously been offered bonds carrying ADNOC risk indirectly. 

ADNOC billed Murban as a "superior proposition for bondholders" in the investor presentation, in part due to a prospective "highest ranking position in ADNOC's cash waterfall".

ADNOC Murban investors get paid before ADNOC Group royalties, most operating expenditures, and tax, the presentation said.

Named after ADNOC's flagship crude grade Murban, the debt-issuing unit is expected to be rated AA by S&P, Aa2 by Moody's and AA by Fitch, ADNOC Murban said in a statement earlier on Tuesday. 

It said the ratings are aligned with its shareholder, the emirate of Abu Dhabi, a regular issuer in the debt capital markets.

Debt issued by ADNOC Murban will not receive guarantees from ADNOC or the Abu Dhabi government, S&P said in its rating report on Tuesday.

"Murban takes momentary ownership of the Murban barrels assigned to it by ADNOC under the assignment agreement and immediately sells the same... barrels to ADNOC Trading and ADNOC," S&P said.

"Murban has effectively been inserted in the crude oil value chain such that it owns no reserves and bears no production costs, royalties, or taxes, but has the first claim on the cash proceeds from these Murban crude oil barrels."

(Editing by Mark Potter, Jason Neely and Jan Harvey) ((; +971566883310I))