State-run Abu Dhabi National Energy Co. (TAQA) is seeking up to $1.5 billion from a two-part bond issue due later on Monday, a spokesperson for the company said, as it raises funds to help refinance upcoming debt. Earlier, lead arrangers released initial guidance on the bond maturing in 2017 and 2021 and indicated both tranches would be benchmark-sized, meaning at least $500 million each. \"The transaction will be for a maximum of $1.5 billion total between the two tranches,\" the spokesperson told Reuters in an email. TAQA, which is 75 percent owned by the government of Abu Dhabi, last month said it would buy back a $1.5 billion bond maturing October 2012 and enlisted four banks to sell new debt. The company is a regular issuer of debt in global markets and benefits from implicit backing from the Abu Dhabi government as one of its strategic firms. Abu Dhabi holds over 90 percent of the UAE\'s oil reserves. \"As a government-controlled investment entity, and as a provider of the bulk of power and water to the Emirate, it is pivotal to the viability of the UAE. It also has extensive international investments,\" said John Bates, head of fixed income at asset manager Silk Invest. \"Demand should be strong for this deal.\" Market sources said arrangers had received orders of over $5 billion when books closed in Europe, Asia and the Middle East. Guidance for the long five-year tranche maturing 2017 is set at 350 basis points over 5-year US Treasuries and 412.5 bps over 10-year Treasuries for the portion maturing 2021. The indicated guidance correlates to a yield of around 4.45 percent for the 2017 tranche and about 6.18 percent for the 2021 maturity, suggesting TAQA has had to pay a decent premium. \"Given the challenging environment, and also the fact that TAQA is looking to raise a chunky amount from this transaction, the premium which it is offering doesn\'t seem out of line,\" said Chavan Bhogaita, head of markets strategy unit at National Bank of Abu Dhabi. \"And the fact that this deal is linked to the tender offer means that the issuer needs to provide some incentive for investors to sell out of the existing issue and buy into the new one.\" TAQA\'s existing bonds fell after the guidance was released, as investors made room for the new issue. \"The new ones look good, what remains to be seen is investor appetite,\" said one regional fixed income trader. TAQA\'s $500 million 6.165 percent 2017 maturity was yielding about 4.5 percent on Monday, up from 4.42 percent on Friday, according to Reuters data. The yield on its $1 billion 2016 maturity carrying a coupon of 5.875 percent rose to 3.944 percent on Monday from 3.682 percent on Friday. Bank of America, RBS, Standard Chartered and Mitsubishi UFJ are arranging the deal. Last week, Qatar printed a $5 billion bond in a three-tranche deal making it the biggest issue from the region this year. Like Qatar, TAQA is also going for a Reg S/144a deal which makes it open to institutional US investors. \"Abu Dhabi and Qatari credits are much sought-after, even when the global pictures looks volatile,\" Silk Invest\'s Bates said.