Abu Dhabi National Oil Co. sold debt compliant with Islamic rules for the first time as the state producer works to diversify funding.
Adnoc raised $1.5 billion with its debut 10-year, Shariah-compliant notes at an annual profit rate of 4.75 percent, it said Monday. The firm had set the spread on the sukuk, as the securities are known, at 60 basis points over US Treasuries.
The company didn’t say what it will use for funds for. It is raising cash amid markets that have become increasingly volatile in recent months as uncertainty over the scale of US tariffs sparks economic-growth concerns and caution around planned investments. Adnoc has been expanding globally with deals for chemical producers and stakes in US LNG export projects.
The United Arab Emirates, a member of the Organization of the Petroleum Exporting Countries, is seeking international investors as it looks to reduce reliance on its own oil revenue. Hedge funds, lawyers and traders have increasingly moved to Dubai and Abu Dhabi to capture new growth opportunities and tap into finance from private and sovereign investors.
Standard Chartered Bank was the global coordinator and joint sukuk structuring bank for the debt. Other regional and international lenders also participated. Adnoc sold the notes through Adnoc Murban, its dedicated vehicle for issuing debt.
The deal follows a $4 billion debut bond sale last year and a $3 billion green loan signed with Japan Bank for International Cooperation.
Two banks in the UAE – Mashreq Bank and Ajman Bank – have tapped dollar sukuk markets since President Donald Trump imposed the steepest US tariffs in a century on April 2. Dubai’s developers are also looking to tap fixed-income investors despite the turmoil. Central banks from the European Union, the UK, Canada and Australia have all cut interest rates recently amid threats of recession, even as the US Federal Reserve keeps policy steady as it continues to struggle with inflation.
Source: By Laura Gardner Cuesta & Anthony Di Paola from Rigzone.com