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.
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.
Investors have previously been offered bonds carrying ADNOC risk indirectly.
In an investor presentation reviewed by Reuters, ADNOC billed Murban as a “superior proposition for bondholders”, 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.”
- Reuters (Editing by Mark Potter, Jason Neely and Jan Harvey)
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