Abu Dhabi’s sovereign wealth fund ADQ sold USD 2 bn worth of bonds in its second debt sale, state news agency Wam reports. The order book was 4.1x oversubscribed, drawing some USD 8 bn in bids from investors across the US, Europe, the Middle East, and Asia.

The details: Issued under its Global Medium Term Note Program, ADQ’s dual-tranche offering is set to be listed on the London Stock Exchange and consists of two tranches worth USD 1 bn each. The 7-year tranche was priced at a spread of 85 bps over US Treasuries, with an annual yield at 4.375%, while the 30-year tranche was priced at 120 bps with a 5.250% yield.

The issuance was met with strong investor demand, prompting the wealth fund to tighten the pricing by 30 bps to 85 basis points over US Treasuries for the 7-year tranche, and 120 bps over for the 30-year tranche, from an initial price guidance of 115 bps and 150 bps over.

ADVISORS- ADQ tapped Abu Dhabi Commercial Bank (ADCB), BofA Securities, Bank of China, BNP Paribas, FAB, JP Morgan, and Mizuho to serve as joint global coordinators and joint active bookrunners.

This marks ADQ’s second-ever dual-tranche bond issuance, following its maiden USD 2.5 bn issuance in May, which is listed on the London Stock Exchange and the ADX. The previous bond sale was 4.4x oversubscribed, attracting over USD 11 bn in orders.

REMEMBER- ADQ is looking to diversify its funding sources for future acquisitions, most recently snagging a USD 1 bn minority stake in Sotheby’s. It has also been exploring various regional investments, with a USD 180 mn tech-focused fund in Oman and a landmark USD 35 bn agreement with Egypt’s government back in February. It also inked agreements in Kenya worth USD 500 mn.

ADQ holds an Aa2 rating from Moody’s and an AA rating from Fitch, both with a stable outlook.

IN OTHER ADQ NEWS-

UK-based fine arts curator Sotheby’s is using ADQ’s USD 1 bn equity investment to offer its creditors a distribution of USD 700 mn, as it looks to cover its debt amid a contraction in the art and auctions markets, Bloomberg reports, citing people with knowledge of the matter. The investment, which provided the sovereign wealth fund with a minority stake, will land in Sotheby’s coffers in 4Q 2024.

Background: S&P Global Ratings had raised concerns about Sotheby’s ability to refinance its debt “if it does not improve performance,” and downgraded its credit rating further into junk territory earlier in June.

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