Abu Dhabi Securities Exchange (ADX) announced the listing of its first green bond, issued by Sweihan PV Power Company (SPPC), which built, owns and operates solar power project Noor Abu Dhabi.
The secondary bond listing of $700 million of fixed-rate amortising senior secured green bonds takes the total number of debt instruments listed on ADX to 28, it said in a statement on Thursday.
The bonds were first issued in January by Abu Dhabi National Energy Company, or Taqa, the majority owner of the Noor Abu Dhabi project, and Emirates Water and Electricity Company, to refinance the existing debt of SPPC.
Maturing in 2049, the bonds offer a 3.625 per cent coupon and the deal was 1.8 times oversubscribed with local, regional and international investors placing total orders of $1.26 billion, the company said at the time.
The listing in Abu Dhabi comes under the exchange's ADX One strategy of "attracting new listings and innovative product offerings" and is also part of the emirate's plans to establish itself as a "green bond hub".
The listing "comes in line with the UAE vision for the next 50 years and its continuous efforts to drive sustainable economic growth and the country’s net zero by 2050 initiative", Ahmed Al Rumaithi, undersecretary of Abu Dhabi Department of Energy, said.
"It is a strategic step towards establishing Abu Dhabi as both a sustainable finance and a green bond hub ... We are committed to supporting green bond initiatives and providing a fit regulatory framework in collaboration with all stakeholders in order to ensure green financing and refinancing options are available for Abu Dhabi’s sustainable projects.”
Green financing involves structured financial instruments that are created specifically to fund environment, ecology or sustainability-related projects. It includes an array of loans and bonds to encourage the development of projects in sectors such as renewable energy, energy efficiency, pollution prevention, biodiversity conservation and circular economy initiatives.
Globally, the green bond market is estimated to reach $2.36 trillion by 2023, according to the World Economic Forum.
By creating the right structures and mechanisms for green finance, governments in the GCC can unlock $2tn in cumulative economic output and create more than one million jobs by 2030, Strategy& Middle East, which is part of the PwC network, said in a report last month.
Investors around the globe are keen to invest in green schemes and having the right frameworks in place could also help to boost foreign direct investment in sustainable industries, it said.
Noor Abu Dhabi, which has been been operational for three years, has 1.2 gigawatts of direct current power generation capacity — the equivalent of supplying more than 90,000 households while reducing CO2 emissions by 1 million metric tonnes annually.
It is 60 per cent owned by Taqa with the remaining 40 per cent owned by Marubeni Corporation and JinkoSolar.
“The growing appetite for green investment opportunities and the availability of capital for green projects is increasingly important in supporting the UAE to achieve net zero objectives for 2050," Jasim Thabet, Taqa's group chief executive and managing director, said.
"Noor Abu Dhabi’s secondary listing on the ADX opens the door for local investment as the first green bond to be listed in Abu Dhabi and further supports Taqa's strategy toward sustainable growth and returns.”
ADX has embarked on several new initiatives to enhance liquidity and boost its market capitalisation as part of its new strategy. Announced at the beginning of 2021, the ADX One strategy comprises 22 projects to encourage build listings pipeline, enhance corporate governance and introduce new products and services that meet the requirements of issuers and global investors.
"The listing of Sweihan PV Power Company’s green bond reflects ADX’s sustained ability to create a dynamic debt capital market ecosystem," said Saeed Al Dhaheri, managing director and chief executive of ADX.
"With ESG growing in prominence across the region and green bonds being at the forefront of product innovation in this space, we welcome and celebrate this historic milestone of ADX’s first green bond listing.”