Abu Dhabi’s possible $800 million bond offering for a power plant may kickstart Arabian Gulf project bond sales as regional yields fall to near seven-year lows and governments spend oil wealth on infrastructure.
Abu Dhabi National Energy Co and its partners in the Shuweihat S2 plant will sell debt in October to refinance loans, two bankers with knowledge of the matter said in the past week. Middle East bond sales almost doubled to $30 billion (Dh110 billion) in 2012, compared with a 29 per cent gain in emerging-market sales, data compiled by Bloomberg show.
Project finance bonds are luring more companies in the Gulf Cooperation Council as average Middle East corporate bond yields plunged 133 basis points to 3.9 per cent on August 7, the lowest since February 2005, according to HSBC/Nasdaq Dubai’s Middle East Conventional Corporate US Dollar Bond Index. The bonds are secured by developments such as roads or energy plants and pay the coupon and principal from cashflows.
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