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UAE's State Oil Firm Prepares For First Bond Issue

Abu Dhabi National Oil Company (ADNOC) has created a new entity that will sell the first bond of the United Arab Emirates' oil producer as the OPEC member looks to diversify its income away from oil.

ADNOC will be the latest national oil company in the Middle East to look to tap into the bond market, after Saudi Aramco and QatarEnergy.

In June last year, Saudi Aramco raised $6 billion via its first Islamic bond denominated in U.S. dollars, orders for which exceeded $60 billion. Later in the same month, QatarEnergy, formerly Qatar Petroleum, raised $12.5 billion in a four-tranche bond in the largest corporate issuance in the Middle East and the biggest debt sale in emerging markets in 2021.

Until now, ADNOC has mostly relied on bank loans to fund its expansion as it aims to boost its oil production capacity to 5 million barrels per day (bpd) by 2030 from 4 million bpd now, diversify into blue and green hydrogen, and invest in joint renewable projects to power its oil operations.

ADNOC has now created a new, wholly owned subsidiary, ADNOC Murban RSC Ltd, which will become the primary debt capital markets issuing and rated entity for ADNOC Group, the Abu Dhabi-based oil firm said on Tuesday.

ADNOC Murban will be the issuer of the first bond for the UAE's state oil firm, with the sale expected later this year.

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, ADNOC said today.

"ADNOC Murban intends to closely monitor market conditions and explore potential funding opportunities," the UAE oil firm added.

ADNOC Murban launched meetings with investors on Tuesday, according to an investors' note seen by Reuters.

The meetings will target investors in the U.S., Asia, Europe, and the Middle East and Africa region, and are being coordinated by JPMorgan and Morgan Stanley, the note seen by Reuters showed.

By Charles Kennedy for Oilprice.com

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