The third-largest lender in the UAE, Abu Dhabi Commercial Bank (ADCB), has set the price for its first $500 million green bond that will enable it to fund projects that adhere to environmental, social, and governance (ESG) requirements.
The five-year bond, priced 115 basis points above treasuries, carries a 4.5 percent coupon rate, ADCB said in a statement on Thursday.
The transaction was 3.8 times oversubscribed, attracting $1.9 billion in orders from local, regional and international investors.
The bond, which will be issued on September 14, follows a global roadshow and reflects confidence in ADCB as well as its approach to managing ESG risks and opportunities, the bank said.
“The successful pricing of the first ADCB green bond is a significant milestone in the bank’s implementation of international best practice in ESG,” said Alaa Eraiqat, ADCB’s group chief executive.
“The bank has adopted a green bond framework to provide a long-term platform to support further mobilisation of capital for green projects. We look forward to collaborating with clients and other stakeholders to advance in our shared ambition for a net-zero future.”
Lenders and corporations across the region are increasingly looking to raise financing for ESG and sustainability-linked projects. First Abu Dhabi Bank, along with Dubai’s Majid Al Futtaim Holding, are among the UAE issuers of green financing deals.
Abu Dhabi National Energy Company, better known as Taqa, and Emirates Water and Electricity Company, raised $700.8m through its first green bond as it diversifies funding sources to include sustainable financing for projects.
Taqa will use proceeds of the deal to refinance the existing debt of Sweihan PV Power Company, the entity set up to build, own and operate Noor Abu Dhabi solar power project, it said earlier this year.
Globally, the issuance of green bonds climbed 87 percent to $532bn in 2021. However, the value of transactions fell more than 34 percent in the three months to the end of March to $83.8bn, S&P Global Ratings said in a report, citing Climate Bonds Initiative data.
The rating agency expects sustainability-linked bonds to be the fastest-growing subset of ESG bonds. In 2021, $92bn of sustainability-linked bonds were issued, marking a 989 percent increase over the previous year.
ADCB said it has embedded ESG into its corporate strategy and has aligned its sustainability approach to the UAE’s ambitions for an inclusive, net-zero economy.
It is committed to provide Dh35bn ($9.53bn) in green finance by 2030, reaching net zero in its own operations and reduce financed emissions in line with the UAE government’s net-zero ambitions.
The proceeds of the bond issuance will further support the financing of a low-carbon economy in line with the criteria set out in the framework.
Initiatives eligible for green loans include projects or companies associated with renewable energy, green buildings, sustainable water, and wastewater treatment, clean transport, energy efficiency, and pollution prevention and control.
ADCB reported a 12% yearly increase in net profit for the second quarter in July, mostly due to increased interest rates and higher non-interest income. For the three months ending in June, the bank’s net profit increased to Dh1.57 billion.
