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Welcomed with a fanfare

23 Feb 2007

A $3.5bn blowout from the Middle East lit up the market for corporate bonds from Eastern Europe, the Middle East and Africa last year. Size, ambition and execution: Taqa had it all, and it was a clear winner for Emerging Market Deal of the Year.

New issuance from the emerging markets of Eastern Europe, the Middle East and Africa reached new highs in 2006, but it was October's debut issue from the Abu Dhabi National Energy Co (Taqa) that generated the biggest noise in the market.

The company, 75% owned by the Abu Dhabi government, made a dazzling entry into the international capital markets when investors, hungry for exposure to Middle Eastern corporate risk, showered Taqa with a $10bn order book for a three tranche blowout totalling the equivalent of $3.5bn.

The Aa3/A+ rated deal comprised a Eu750m seven year bond, a $1bn 10 year and a $1.5bn 30 year tranche. The bulging book allowed the leads to price all three tranches at the tight end of guidance. More than 200 investors were allocated bonds.

Taqa has holdings in six electricity and desalination companies in the United Arab Emirates, and according to its chief executive Peter Barker Homek, "investors liked the country, liked our domestic business and liked the credit."

"The story about participating in the domestic market and expanding regionally and globally — to the UK in the west, Morocco in the south, and east to India — really appealed. We are emerging as a blue chip in the region," he said.

Goldman Sachs was awarded the coveted sole bookrunner role, triumphing over 20 other banks for one of the most hotly contested mandates of the year.

"The capital markets seemed a sound way to get out and market to the global financial community and get Taqa and the United Arab Emirates' story transmitted around the globe," said Barker Homek. "So the deal was [designed] both to boost our balance sheet and build the Taqa brand in the minds of international investors."

The bond achieved a dizzying array of firsts. It was the Middle East region's largest straight bond issue, the $1.5bn 30 year piece was the largest long bond, the Eu750m trade the largest euro benchmark ever and overall, generated the largest order book ever by a Middle East borrower.

Wassim Younan, CEO of Goldman Sachs in the Middle East and North Africa, described Taqa as an "important milestone in the continued growth and development of the capital markets in Abu Dhabi, the United Arab Emirates and the region as a whole."

The market, it seems, agreed.

23 Feb 2007