International Petroleum Investment Company (IPIC), the investment vehicle owned by the Abu Dhabi government, will price a dual-currency three-tranche bond on Tuesday, and has released price talk for the dollar-denominated portion.
IPIC, rated AA, plans to issue a three-year dollar-denominated portion, and two euro-denominated pieces carrying maturities of 5.5 and 10.5 years, arranging banks said on Monday.
Price indications for the dollar portion was released at 2 percent, later on Monday evening. Guidance for the euro-denominated tranches is expected on Tuesday morning, London time, according to lead arrangers.
All three tranches will be benchmark-sized, typically at least US$500m, but judging by the company's previous issues, the final amount could be much larger.
"It looks like the company needs euros desperately. The selection of leads implies that IPIC has come to tap the euro market and the dollar issue is just to satisfy some home demand," said a regional trader.
According to some traders, IPIC's existing euro-denominated bonds, maturing in 2016 and 2021, were issued at high coupon rates of 4.875 and 5.875 percent, but spreads have tightened significantly this year, allowing the company to term out the maturities at tighter pricing.
IPIC, which owns stakes in Austrian energy group OMV and Spain's Cepsa, had total outstanding borrowings of about US$18.57bn at the end of June 2012, excluding subsidiaries, according to a company prospectus, of which over US$7bn in loans are set to mature by the end of 2013.
The first bond maturity is in 2015, a US$1bn 3.125 percent issue. The bond came under selling pressure after Monday's announcement, as did other bonds along IPIC's curve, as investors make room for the new issue.
It was bid at 103.75 cents on the dollar on Tuesday morning, according to data provided by Deutsche Bank Autobahn, to yield 1.9 percent, up from about 1.8 percent on Monday.
BNP Paribas, JP Morgan Chase, National Bank of Abu Dhabi, Natixis, RBS and Unicredit are joint bookrunners on IPIC's latest deal.
IPIC's profit for the six months to the end of June totalled US$818m, down from US$1.16bn a year ago, the company said earlier in November.