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Abu Dhabi’s IPIC Discussing Potential Bond Sale with Banks | ASHARQ AL-AWSAT English Archive 2005 -2017
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Motorists drive along Sheikh Zayed road in Dubai December 25, 2009.- REUTERS/MOSAB OMAR

Abu Dhabi’s International Petroleum Investment Co. (IPIC) is discussing with banks the possibility of issuing a bond denominated in euros, three sources aware of the matter said on Monday, with the cash to be used to refinance an upcoming maturity.

The transaction, if it happens, would result in a rare bond sale from an Abu Dhabi government-related entity, meaning it would likely bring in international investors interested in adding the highly-rated emirate to their portfolios.

IPIC, rated two notches below the top AAA rating by all three international rating agencies, is talking to the nine banks that supported a 3.6 billion euro loan issued on behalf of its subsidiary Aabar Investments in March this year about the new bond issue, two of the sources said.

The sources explained that the revenue of the potential bond will be used to refinance an upcoming maturity. IPIC has a 1.25 billion euro bond that was originally sold in 2011 and falls due in mid-May, according to Thomson Reuters data.

A spokesman for IPIC didn’t immediately respond to a request for comment. The sources spoke on condition of anonymity as the information is not public.

The sources added that the bond sale still awaits the approval of the emirate’s Debt Management Office before it can proceed.

The office must sign off on all bond issues by the emirate’s government-related entities; a process put in place to avoid a sovereign-linked debt crisis similar to that suffered by neighboring Dubai at the turn of the decade.

The nine banks that provided the loan to Aabar in March were: Bank of America-Merrill Lynch, BNP Paribas, HSBC, Intesa Sanpaolo, JP Morgan, National Bank of Abu Dhabi, Natixis, Societe Generale and Sumitomo Mitsui Banking Corp.

IPIC invests in oil and gas-related assets for the Abu Dhabi government. Bankers have pointed out in the past that with many of its main revenue-generating assets in Europe, including Austrian chemicals company Borealis and Spanish energy firm CEPSA, it makes sense for IPIC to borrow in euros instead of dollars, to which the United Arab Emirates Dirham is pegged.