The United Arab Emirates (UAE) is gearing up to host COP28 in November. Ahead of the climate change conference, major UAE institutions are intensifying their commitment to green financing.
Green bonds
For instance, more banks have been issuing green bonds. This includes Abu Dhabi Commercial Bank (ADCB), which has successfully priced a green bond worth $650 mn. In particular, the said bond was priced with a spread of 125 basis points (bps) above US treasuries and carried a coupon rate of 5.50 percent. Additionally, it received strong demand, being oversubscribed 2.9 times and attracting investors who placed total orders exceeding $1.9 bn.
The funds that the bond issuance will raise will finance environmentally friendly assets. The bank’s Green Bond Framework will determine the assets’ eligibility. This is ADCB’s second green bond issuance. In September last year, it issued its inaugural $500 mn green bond.
“ADCB’s second green bond issuance is a significant milestone in our climate strategy, aimed at financing climate change solutions in support of the UAE Net Zero by 2050 Strategic Initiative. As the UAE prepares to host COP28, ADCB stands ready to assist customers in their journey towards success in a net-zero economy,” stated Ala’a Eraiqat, ADCB’s chief executive officer.
The Commercial Bank of Dubai (CBD), another major banking institution, has previously raised $500 mn through its inaugural green bond issuance in June. Orders for the five-year bond hit an impressive $1.5 bn.
For this issuance, the proceeds will finance various initiatives. These encompass renewable energy, green infrastructure, and sustainable transportation, among others.
Read: Leading UAE banks allot $51.8 bn to green financing
Funding renewable energy projects
Masdar, a prominent Abu Dhabi renewable energy company, also recently announced the successful completion of its first-ever green bond issuance. It raised $750 mn through 10-year senior unsecured notes.
This milestone gained interest from both regional and international investors, with orders surging to a whopping $4.2 bn. The net proceeds from this bond and future offerings will fund various “dark green” renewable energy projects. The projects have to meet guidelines stipulated in the company’s Green Finance Framework.
This bond is only the initial phase of a broader program, which aims to raise up to $3 bn in bonds. The proceeds from all bonds will finance vital projects within the renewables sector. This includes wind power, solar energy, renewable energy transmission and distribution infrastructure, and battery storage assets.
Within the Gulf Cooperation Council (GCC), of which the UAE is a part, countries have witnessed a substantial surge in green bond and sukuk issuances in 2022. It reached an unprecedented total of $8.5 bn through 15 transactions. This is a significant increase from the $605 mn that six deals raised in the previous year. This data is from Bloomberg’s Capital Markets League Tables.
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