RIYADH: Abu Dhabi-based Masdar has concluded its first green bond issuance of $750 million, aiming to exclusively use the proceeds to fund renewable projects in developing and climate-vulnerable countries.
The bond, sold through 10-year unsecured notes, was 5.6 times oversubscribed as Masdar currently holds an order book of $4.2 billion.
In a press release, Masdar said the pricing was tightened 35 basis points between launch and final terms, with a final landing spread of 115 bps over US Treasuries and a coupon of 4.875 percent.
While 87.5 percent of the bonds were allocated to international investors, 12.5 percent were disbursed in the Middle East and North Africa.
“It is vital to make finance more available, accessible and affordable for developing economies if we have any chance of meeting climate goals to supercharge sustainable development,” said Sultan Al-Jaber, the UAE minister of industry and advanced technology, in a statement.
Al-Jaber, who is also the chairman of Masdar and COP28 president-designate, added: “Ahead of the UAE hosting the UN climate change conference, we must champion initiatives that advance climate finance and decarbonization.”
He continued that by helping to provide funding toward green energy projects where they are needed, the issuance of Masdar’s green bonds will back these twin aims.
This move aligns with the firm’s green finance framework focusing on developing economies and climate-vulnerable countries in critical need of investments.
The issuance is part of a program to raise up to $3 billion of bonds to meet Masdar’s equity funding commitments on new green projects.
“We look forward to the involvement of many top-class investors in our journey toward delivering renewable energy and accelerating the net-zero transition around the globe,” said Masdar CEO Mohamed Jameel Al-Ramahi, in the statement.
Masdar said the oversubscription of the debut green bond signals investor confidence in the firm’s financial strength along with its 17 years of sustainability credentials.
“We remain committed to maintaining a prudent approach to funding our ambitious growth plans, which includes maintaining our investment grade credit ratings from Fitch and Moody’s,” highlighted Niall Hannigan, Masdar’s chief financial officer.
The net proceeds from the bonds will be utilized in solar, wind and renewable power transmission, among others.
“These projects will make a major contribution toward mitigating climate change, but they will also make a real difference to the local communities they serve,” explained Hannigan.
Established in 2006, Masdar plans to grow its renewable energy capacity to 100 gigawatts and green hydrogen production of 1 million tons per annum by 2030.