UAE - Mubasher: Moody's Investors Service (Moody's) has assigned the 'Aa2' rating to the senior secured amortising bonds, which will be issued by Galaxy Pipeline Assets, owned by a consortium of investors holding a stake in ADNOC's gas pipeline assets, with a stable outlook.

The proceeds of the bond issuance will be used in refinancing existing bank debt and paying hedge break costs and associated fees, currently amounting to about $8 billion, according to a press release on Thursday.

The Aa2 rating of Galaxy's bonds shows the strategic importance of the pipeline to Abu Dhabi National Oil Company (ADNOC) and the Abu Dhabi government.

The rating also reflects high predictability of revenue under a long-term pipeline use & operation agreement, with a fixed tariff and minimum volume commitment from a creditworthy counterparty.

Meanwhile, Moody's stable outlook demonstrates that the rating on the Abu Dhabi government's bond is stable.

Commenting on the rating, Moody's Vice President - Senior Credit Officer and Lead Analyst for the Issuer, Christopher Bredholt, said: "The Galaxy BidCo bonds will refinance debt raised to part-fund the purchase of a share of critical gas pipeline assets for Abu Dhabi, and the credit benefits from risk transfer to ADNOC."

Bredholt added: "The sale of a minority interest to institutional investors is consistent with ADNOC's stated strategy to unlock value in its midstream assets while retaining operational control."

Noteworthy to mention, on Thursday, Reuters reported that Galaxy Pipeline Assets has authorised banks to issue US dollar fixed-rate bonds of maturities of up to 20 years, Reuters reported.