Deals of the Year 2011: Aabar Investments PJS unsecured exchangeable bond
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Deals of the Year 2011: Aabar Investments PJS unsecured exchangeable bond

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.

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