November 7, 2017 / 7:43 AM / in a year

Joint venture behind UAE’s Fujairah 1 plant to announce project bond - sources

LONDON/DUBAI, Nov 7 (Reuters) - Emirates SembCorp Water & Power, the joint venture behind a desalination plant in Fujairah, is expected to announce a U.S. dollar project bond issue as early as Tuesday, sources familiar with the matter said.

The bond would come less than two weeks after the launch of a $3 billion project bond by a subsidiary of Abu Dhabi National Oil Company (ADNOC) which, having attracted orders in excess of $11 billion while it was being marketed, showed investors’ appetite for these issues.

Such debt instruments are relatively new financing tools in the Middle East, where projects have traditionally been financed through bank loans because of banks’ high liquidity before oil prices dropped three years ago.

Citigroup and HSBC are expected to lead the transaction, said the sources.

The desalination plant, called Fujairah 1 Independent Water and Power Plant, is jointly owned by Abu Dhabi Water & Electricity Authority (ADWEA) with a 60 percent stake and Sembcorp Gulf Holding Co, a unit of Singapore’s Sembcorp Industries, with a 40 percent stake.

HSBC declined to comment. ADWEA and Citi did not respond to requests for comment.

Emirates SembCorp Water & Power’s chairman told Reuters in October 2015 that the company was considering issuing a project bond, but did not disclose the size of the planned debt sale.

The Fujairah plant is one of the largest operating hybrid desalination plants in the world, with a power capacity of 893 megawatts and a seawater desalination capacity of 100 million imperial gallons, according to the website of Emirates Sembcorp Water & Power.

Reporting by Robert Hogg and Davide Barbuscia

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