Israel's Delek Drilling and Avner Oil said they plan to raise up to $2 billion in bonds locally and abroad to help fund the development of the huge Leviathan natural gas field off the coast of Israel.
"Once completed, this will be the biggest capital raise held by an Israeli company," the companies, both subsidiaries of conglomerate Delek Group, said.
Company executives began a road show to attract investors in the United States, Europe and Israel. Five series of bonds will be issued, each with its own fixed interest rate, and with the longest maturing in 2025, the companies said.
Avner and Delek Drilling are major shareholders in the group developing Leviathan, which holds an estimated 19 trillion cubic feet of gas and is expected to go online around 2017. Much of the reserves are earmarked for export.
Texas-based Noble Energy is the field's operator with a 39.66 percent stake. Avner and Delek Drilling hold a combined 45.34 percent, and Ratio Oil has the remaining 15 percent.
The partners are due to receive another large sum from the sale of a 30 percent stake in the field to Australia's Woodside Petroleum. However the deal, worth up to $2.7 billion deal, has been held up over a tax disagreement between Woodside and Israel.
By bringing in Woodside, a liquefied natural gas (LNG) specialist, the hope to gain access to a much broader export market, especially Asia.
Officials from Israel and Woodside are still trying to hammer out the remaining issues, though neither side has given specific details on what is holding up the deal.
Underwriting the bonds will be JP Morgan, Citi and HSBC, along with Israel's Leader Capital Market. Avner and Delek Drilling said they expect the offering to get a Baa3 rating from Moody's and a BBB- from Standard and Poor's.
Leviathan was discovered in 2010 and was the world's largest offshore find of the past decade.
The partners have signed a 20-year deal with a Palestinian power company to sell $1.2 billion worth of gas, and earlier this month put in a bid to sell gas through a pipeline to Cyprus.
