The landmark Abu Dhabi Power Bond has been launched in the UAE. The bond securitises a long-term project finance loan extended to Taweelah A2 Power Project through the issuance of loan participation notes by Abu Dhabi Power Bond Ltd. The bond size will be about Dh500mn (US$133.75mn).

The bond issue achieves maturities of four, seven and eight years (three tranches) for an Abu Dhabi Power Project credit through an innovative structuring using asset-backed securitisation.

While asset-backed securitisation has been explored earlier in the region, this is the first time that it has been executed for an infrastructure-related project in the GCC region. In this respect the issue is considered to be a pioneering transaction in the capital market issues for infrastructure financing.

The bond launch is expected to encourage subsequent issues related to the power projects set up under the Abu Dhabi Water & Electricity Authority (ADWEA) privatisation programme. The issue should open a new avenue for the pension funds, insurance companies and other institutional investors to participate in ADWEA power project credits which are otherwise limited to banks.

The National Bank of Abu Dhabi is the lead arranger for the Abu Dhabi Power Bonds. Besides NBAD, the US$133.75mn bond issue is being lead managed and underwritten by Standard Chartered, HSBC and National Bank of Dubai.

The issue will be listed on the Luxemburg Stock Exchange. A subsequent local/regional listing is also being considered.