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| Aabar Investments PJS unsecured exchangeable bond | |
| Size | €1.25 billion |
| Date | May 24 2011 |
| Lead managers | Bank of America Merrill Lynch, Deutsche Bank and Morgan Stanley |
| Coupon | 4% |
| Tenor | Five years |
| return to the Middle East & Africa Deals of the Year index | |
Another example of Gulf firms tapping alternative financing at a time of tighter global liquidity can be seen in the €1.25 billion exchangeable bond from Aabar Investments PJS in May.
The government of Abu Dhabi owns Aabar indirectly through investment vehicle International Petroleum Investment Company (Ipic). The five-year notes were issued over 21% of Aabar’s 9% stake in German car and truck manufacturer Daimler.
"Sovereign wealth funds haven’t traditionally used the equity-linked market," says Bertrand Valet, part of the sovereign wealth funds group covering Aabar at Bank of America Merrill Lynch – one of the bookrunners.
"Aabar has financed stakes through the private market [often using] non-recourse loans backed by derivatives. Our recommendation was to replicate this by using the capital markets to find efficiency in the cost of funding, [which was] not accessible in the private market as much as before.
