Adwea in $2.2bn refinancing talks; bond planned
Abu Dhabi, September 17, 2011
Abu Dhabi Water and Electricity Authority (Adwea) has picked HSBC to advise on the $2.2 billion refinancing of its Shuweihat 2 loan and plans to issue a bond, in a first for a Gulf power project, bankers involved said.
Pitching for the bond portion of the deal was ongoing, two bankers said. The financing was expected to be a mixture of bank loans and the bond.
Banks are meeting Adwea this week and next for lead manager slots on the bond issue, the bankers said. It will be the first time a Gulf region power project has gone to the debt market for funding.
Two or three banks will likely be appointed, one of the bankers said, with the offering set to come to market next year, given the short remaining window for issuance in 2011 and uncertain conditions in credit markets.
More than six banks were said to be pitching, according to the second source, with an annoucement on who has secured the mandate not due until early October.
HSBC was sole advisor on the original financing deal signed in 2009. That loan priced in the aftermath of the global financial crisis and is now considered expensive.
"Any casual observer could see that of all the power projects in the region, it is the most ripe for a refinancing," one of the sources said. "The combination of the peak pricing and the fact construction is due to complete in a matter of months makes it a good time to do a refinancing."
Abu Dhabi government entities have been turning increasingly to the bond market to fund infrastructure projects.
In July, Dolphin Energy, 51 per cent owned by investment fund Mubadala, completed roadshows for a $1.93 billion dual-tranche bond aimed at refinancing part of a $3 billion funding package agreed in July 2009.
However, volatile market conditions prevented it from pricing.-Reuters