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8 July 2003 - The $560m refinancing of Abu Dhabi's first independent water and power project (IWPP), the Taweelah A2, is nearly complete and the debt-equity ratio has been revised to 80:20. National Bank of Abu Dhabi (NBAD) may resort to a bond issue of at least $100m from its total underwritten amount of $155m. As the first refinancing for a power project in the UAE and the Gulf, this could be a template for future refinancing in the region, bankers said.
'The refinancing of Taweelah A2 has crystallised and the final touches are being given. The Abu Dhabi Water and Electricity Authority (ADWEA) is happy with the new terms and now the approval of the Executive Council is awaited,' said a senior banker involved with the refinancing. With the refinancing totalling $560m, the debt equity ratio is now 80:20 with the debt part going up. The loan stretches to 17 and a half years and the pricing is improved.
When Taweelah A2 was first financed in 1999 through a syndicated loan led by Barclays Capital it was for $575m. 'Of this, two instalments have been paid and now with lower interest rates, longer maturity and easier terms, it is an ideal option for the developers and ADWEA,' said the banker. While NBAD is underwriting $155m, Abu Dhabi Islamic Bank (ADIB) is underwriting $165m and the rest by some local and international banks including Abu Dhabi Investment Co (ADIC).
NBAD is planning a bond issue of at least $100 to $135m 'It will be a dirham-denominated bond targeting institutional investors such as banks. This will provide an opportunity for investors to invest in a utility project.' The Taweelah A2 project was built on time and on budget, and with the construction risk gone, the timing is right for refinancing, which effectively means a better deal from banks.
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