ADCB prices second green bond to raise $650m for sustainable projects

Transaction 2.9 times oversubscribed, attracting $1.9bn in orders from local, regional and international investors

The market for green and sustainable bonds and sukuk is booming, specifically in GCC economies. Mona Al Marzooqi / The National

Abu Dhabi Commercial Bank, the UAE’s third-largest lender, has priced its $650 million green bond that will help it finance eligible projects that meet its environmentally friendly standards.

The five-year bond, which was priced 125 basis points above treasuries, carries a 5.5 per cent coupon rate, ADCB said on Wednesday in a statement to the Abu Dhabi Securities Exchange where its shares are traded.

The transaction was 2.9 times oversubscribed, attracting more than $1.9 billion in orders from local, regional and international investors.

This marks the bank's second green bond issuance, following the debut $500 million green bond issuance in September 2022.

“ADCB’s second green bond issuance is a significant development in the delivery of our climate strategy, which is aimed at financing solutions to tackle climate change in the UAE Net Zero by 2050 Strategic Initiative,” said Alaa Eraiqat, ADCB's group chief executive.

“The positive response from investors to this issuance reflects the value they see in our approach to green finance,” he said.

The market for green and sustainable bonds and sukuk is booming, specifically in GCC economies, as governments in the oil-rich economic bloc push to meet their net-zero commitments.

Total GCC green and sustainable bond and sukuk issuances last year reached a record $8.5 billion from 15 deals, compared with $605 million from six deals in 2021, amid increased participation from banks and government-related entities, data from Bloomberg’s Capital Markets League Tables showed.

Last month, Abu Dhabi clean energy company Masdar listed its first green bond on the London Stock Exchange to fund its new clean energy projects.

Masdar completed its issuance for the $750 million green bond offering on July 19 through the sale of 10-year senior unsecured notes. The offering was 5.6 times oversubscribed, with the order book peaking at $4.2 billion, following strong appetite from regional and international investors.

In April, Abu Dhabi National Energy Company, better known as Taqa, raised $1 billion from its debut green bond, net proceeds of which will be used for financing, refinance and investment in green projects.

In May, Majid Al Futtaim Holding, one of Dubai's biggest private sector companies and the Middle East's largest mall operator, raised $500 million through a green sukuk, its fourth in about four years.

The same month, Aldar Investment Properties, the real estate management unit of the emirate’s largest listed developer, Aldar Properties, also raised $500 million through its debut green sukuk to fund acquisitions and meet its sustainability goals.

ADCB said its latest issuance was linked to the bank’s commitment to provide Dh35 billion ($9.53 billion) in green finance by 2030.

The proceeds will be used to finance eligible green projects in accordance with ADCB's green bond framework, it said.

ADCB reported a 23 per cent increase in its 2022 net profit, driven by higher income across its operations.

Net profit attributable to equity holders for the 12 months ending December reached a record Dh6.43 billion, up from Dh5.24 billion a year earlier.