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Thu 14 Apr 2011 09:45 AM

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Mubadala Development sells $1.5bn of 5-year, 10-year bonds

Abu Dhabi-owned investor with stakes in Carlyle Group and GE plans to boost spending to $16.3bn this year

Mubadala Development sells $1.5bn of 5-year, 10-year bonds

Mubadala
Development Co, an Abu Dhabi government-owned investor with stakes in Carlyle
Group and General Electric Co, sold $1.5bn in bonds as the company plans to
boost spending to $16.3bn this year.

It
issued $750m of 5-year bonds that were priced to yield 180 basis points more
than similar-maturity US Treasuries, according to a person familiar with the
offering, who declined to be identified because terms aren’t set. It also sold
$750m of 10-year debt yielding 210 basis points over similar maturity
treasuries, the person said. The issuer of the debt is MDC-GMTN BV and Mubadala
is the guarantor.

Mubadala
is boosting spending fourfold this year as it directs funds to companies such
as Advanced Technology Investment Co, Mubadala GE Capital and its Masdar
project. The group spent an average AED16.4bn ($4.5bn) over the last three
years, according to the bond prospectus.

Borrowing
costs in the six-member Gulf Cooperation Council fell 66 basis points, or 0.66
percentage point, to 5.32 percent from this year’s high of 5.98 percent on
March 18, according to the HSBC/NASDAQ Dubai GCC Conventional US Dollar Bond
Index.

Abu
Dhabi, home to more than 7 percent of the world’s proven crude reserves, is
seeking to diversify from oil by investing in industries including real estate
and aerospace. Capital contributions of as much as AED37.8bn have been approved
by the government for 2011, Mubadala said in the prospectus.

The
company posted a comprehensive loss of AED315m for 2010, because of declines in
“mark-to-market” investments. Mubadala said March 10 that it’s in talks with
state-owned Dubai Aluminium Co. to expand their partnership. Gulf News reported
that day, citing Sheikh Hamdan Bin Rashid Al Maktoum, Dubai’s deputy ruler,
that Mubadala has offered to buy a stake in Dubai Aluminium to create a new
holding company.

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