Abu Dhabi Islamic Bank raises $500m from green sukuk issuance

World's first green dollar-denominated sukuk issued by a financial institution was oversubscribed 5.2 times

ADIB reported a 41 per cent annual surge in its third-quarter net profit to Dh1.42 billion ($386 million). Khushnum Bhandari / The National

Abu Dhabi Islamic Bank has raised $500 million through the issuance of Sharia-compliant green bonds as the biggest Islamic lender by assets in the emirate continues to diversify its funding base, advance sustainable solutions and address climate change challenges.

ADIB priced the five-year senior sukuk at a profit rate of 5.695 per cent per annum payable semi-annually and will be listed and traded on London Stock Exchange’s International Securities Market and Sustainable Bond Market, the Abu Dhabi-listed lender said in a statement on Wednesday.

The deal, which attracted interest from more than 100 global and regional investors, was 5.2 times oversubscribed as the final order book closed at $2.6 billion.

ADIB aims to allocate an amount equal to the net proceeds of this issuance to fund green projects to accelerate the climate transition.

The initiatives will include the financing or refinancing of green projects as well as financing customers for eligible green projects as described under the eligibility criteria in the ADIB Sustainable Finance Framework, the lender said.

“This is an important step in our sustainability journey and will further expand the bank’s role in catalysing capital to address the pressing environmental and social issues facing society today,” said Nasser Al Awadhi, ADIB group chief executive.

“The overall success of this sukuk can be attributed to ADIB's clear ESG [environment, social and governance] framework and our strong track record of both growing market share and delivering sustainable returns.”

ADIB, which is rated A2 by Moody’s and A+ by Fitch, with a stable outlook, said the issuance was driven by demand across three regions. The final allocations stood at 78 per cent to Middle East and North Africa, 13 per cent to Europe and 9 per cent to Asia and the US.

By investor type, private banks subscribed to 26 per cent of the total allocation while asset and fund managers accounted for 17 per cent, commercial banks for 42 per cent and other investors for 16 per cent.

Standard Chartered Bank was the global co-ordinator and sustainability structuring agent for the deal, while ADIB, Emirates NBD, First Abu Dhabi Bank and Sharjah Islamic Bank acted as joint lead managers and bookrunners.

In July, ADIB also raised $750 million through the issuance of Sharia-compliant bonds.

In October, the lender reported a 41 per cent annual surge in its third-quarter net profit to Dh1.42 billion ($386 million). Gross revenue from funds for the period rose 89 per cent year-on-year to Dh2.4 billion, while investment income jumped 35 per cent to Dh246 million.