ADIB issues world’s first green USD sukuk, raises $500 million

To be listed and traded on London Stock Exchange
ADIB issues world’s first green USD sukuk, raises $500 million
Green sukuk continues to attract exceptional interest from investors

Abu Dhabi Islamic Bank (ADIB) has recently completed its green USD sukuk offering, successfully raising $500 million. This issuance marks the first green US dollar-denominated sukuk issued by a financial institution. 

ADIB priced the five-year sukuk at a competitive profit rate of 5.695 percent per year, payable semi-annually. This Sharia-compliant bond will be listed and traded on the London Stock Exchange’s International Securities Market and Sustainable Bond Market.

“We are thrilled to be the first financial institution in the world to issue the first USD-denominated green sukuk, which builds on ADIB’s efforts to address climate change and to advance sustainable solutions that protect the environment and help facilitate a transition to a low-carbon economy,” said ADIB Group CEO Nasser Al Awadhi.

Furthermore, he said that “this is an important step in our sustainability journey.” “[It] will further expand the bank’s role in catalyzing capital to address the pressing environmental and social issues facing society today,” he added.

A milestone in Islamic finance

This green USD sukuk issuance by ADIB garnered remarkable interest, attracting over 100 global and regional investors. With this, the final order book was at $2.6 billion. This oversubscription rate of 5.2 times enabled a substantial tightening of the final price guidance by 30 basis points. From the initial 145 basis points, it was down to 115 basis points over the five-year US Treasury Rate.

Moreover, the issuance received widespread demand across three major regions, with final allocations of 78 percent to the Middle East and North Africa region, 13 percent to Europe, and 9 percent to Asia and the USA. By investor type, private banks accounted for 26 percent, asset and fund managers 17 percent, commercial banks 42 percent, and others 16 percent.

Al Awadhi shared, “We have received exceptional interest from a broad range of domestic, regional and international investors. Demand for this issuance exceeded the issue size by 5.2 times, highlighting the tremendous demand and confidence from global investors in ADIB’s asset quality. We are also pleased to see this strong international demand continue as the pricing was tightened significantly.” 

“The overall success of this Sukuk can be attributed to ADIB’s clear ESG framework and our strong track record of both growing market share and delivering sustainable return,” he further enthused.

ADIB green USD sukuk

In support of green projects

ADIB plans to allocate the net proceeds from this issuance to fund eligible green projects that support sustainable climate transition. These projects may include financing or refinancing green initiatives. In addition, it aims to finance customers for eligible projects based on the Eligibility Criteria outlined in the ADIB Sustainable Finance Framework.

ADIB appointed Standard Chartered Bank as the sole global coordinator and sustainability structurer. Meanwhile, ADIB, Emirates NBD, First Abu Dhabi Bank (FAB) and Sharjah Islamic Bank will be the joint lead managers and bookrunners.

Read: UAE national banks green finance agenda in support of COP28, net-zero 2050

Green sukuk continues to grow

Green sukuk has been on the rise in recent years, attracting investors keen on supporting environmentally conscious projects. In 2022, environmental, social and governance (ESG) sukuk saw remarkable growth. Specifically, the total value of ESG sukuk issuances reached $8.1 billion. This is significantly higher than 2021’s $6 billion. This is according to a report from Refinitiv, an American-British global provider of financial market data and infrastructure.

Earlier in July, FAB, the largest lender in the UAE, introduced the nation’s very first dirham-denominated green sukuk. This further emphasizes the growing prominence of green issuances throughout the region.

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