The Galaxy Pipeline Assets BidCo, owned by a consortium of investors that owns shares in Abu Dhabi National Oil Company’s (ADNOC) natural gas pipeline assets has reportedly raised $3.92 billion in a dual-tranche amortizing bond offering.
In 2021, the Gulf region has witnessed a deluge of debt sales, as borrowers in the oil-dependent region intend to make benefit out of cheap rates and generous global liquidity to plug finances hit by the pandemic-induced decline.
As per documents from banks, the issuers have sold $1.75 billion in a tranche maturing on March 2034, at 2.16 percent and $2.17 billion in a tranche maturing on September 2040, at 2.94 percent after receiving over $8 billion in combined orders.
The issuance was given initial price guidance of around 2.38 percent for the first tranche and around 3.16 percent for the second tranche. The amortizing bonds have an average life of 7.3 years and 12-1/2 years respectively, which means the principal will be repaid in those time frames.
The deal was arranged by financial service providers including Citi, HSBC, Mizuho, First Abu Dhabi Bank (FAB), Santander, SMBC Nikko, Societe Generale, Abu Dhabi Commercial Bank (ADCB), BNP, Credit Agricole, Emirates NBD, Natixis, Mitsubishi UFJ Financial Group (MUFG), Samba, Standard Chartered, Caixabank and DBS Bank.
The proceeds from the issuance will be used to refinance, in whole or in part, existing bank financing, terminate hedging agreements and for transaction costs. The issuer comprises Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board and Italy’s SNAM.
Last year, the issuer acquired a 47.7 percent share in ADNOC Gas Pipeline Assets, a subsidiary of ADNOC with lease rights to 38 pipelines. The acquisition was backed by a $7.96 billion loan. In October, Galaxy raised $4 billion in a three-part bond sale.
ADNOC leased its ownership of the pipeline assets to its Gas Pipeline Assets for 20 years in return for a volume-based tariff. The subsidiary will distribute 100 percent of free cash to the investors as quarterly dividends.