ADNOC to tap debt capital markets via newly set up unit


Abu Dhabi National Oil Company (ADNOC), the United Arab Emirates (UAE) top oil producer, announced on Tuesday (Jan. 26), that it has created a new, wholly owned subsidiary, ADNOC Murban RSC Ltd (ADNOC Murban), to become its primary vehicle for selling debt.

The company, named after ADNOC’s flagship crude grade Murban, prepares to sell bonds for the first time as the energy-rich country pushes plans to diversify its economy and attract international investors.

ADNOC Murban is expected to be rated “AA” by Standard & Poor’s, “Aa2” by Moody’s Investor Services and “AA” by Fitch Ratings – aligned with ratings assigned to ADNOC’s shareholder, the Emirate of Abu Dhabi.

These strong ratings reflect ADNOC’s conservative and robust financial profile, resilient operations, and the low cost and low carbon intensity of ADNOC Murban’s onshore production.

ADNOC expects to maintain the “AA” instrument rating provided by Fitch of the 2024 ADNOC Distribution exchangeable bonds (ISIN: XS2348411062). Separately, the company has requested the withdrawal of its Group-level credit rating, first assigned by Fitch in February 2019, given the establishment of ADNOC Murban as ADNOC’s primary capital markets issuing and rated entity.

The new entity intends to closely monitor market conditions and explore potential funding opportunities.

The company began holding investor meetings on Tuesday, Reuters reported. 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 an investors’ note seen by the news agency.

Tapping the debt capital markets will give the company another tool for raising cash and potentially more flexibility to extend its debt maturities and better pricing.

“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,” ADNOC Group’s chief investment officer Klaus Froehlich said during an investor presentation reviewed by Reuters.

Proceeds from the upcoming bond sale will be used to refinance loans, according to Froehlich as the UAE-based company has $6 billion in loans maturing this year and $10 billion over the following three years.

The UAE, the Arab world’s second-largest economy, is the third-largest producer in the Organization of Petroleum Exporting Countries. The Emirate of Abu Dhabi, a regular issuer in the debt capital markets, sold a 50-year bond in 2020, the longest maturity of any Gulf government debt.