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ADIB successfully issues $500 million green senior sukuk

This is the world’s first ever green dollar sukuk issued by a financial institution

Abu Dhabi Islamic Bank (ADIB) announced on Wednesday that it has successfully raised $500 million via a green sukuk offering, marking the world’s first ever green dollar sukuk issued by a financial institution.

ADIB, which is rated A2 by Moody’s and A+ by Fitch, in both cases with a stable outlook, priced the five-year senior sukuk rated A+ by Fitch at a profit rate of 5.695 per cent per annum payable semi-annually. The new sukuk will be listed and traded on London Stock Exchange’s international securities market and sustainable bond market.

The issuance was met with exceptional demand, attracting interest from over 100 global and regional investors with the final orderbook closing at $2.6 billion, representing an oversubscription rate of 5.2 times. This has allowed the final price guidance to be tightened meaningfully by 30 basis points to 115 basis points over five year U.S. Treasury Rate, from initial price thoughts of 145 basis points.

ADIB intends to allocate an amount equal to the net proceeds of this issuance to fund eligible green projects to accelerate climate transition, which may 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.

Nasser Al Awadhi, ADIB group chief executive officer, said: “We are thrilled to be the first financial institution in the world to issue the first US dollar-denominated green Sukuk, which builds on ADIB’s efforts to address climate change and to advance sustainable solutions that protect the environment and help facilitate a transition to a low-carbon economy. 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.”

“We have received exceptional interest from a broad range of domestic, regional and international investors. Demand for this issuance exceeded the issue size by 5.2 times, highlighting the tremendous demand and confidence from global investors in ADIB’s asset quality. We are also pleased to see this strong international demand continue as the pricing was tightened significantly. The overall success of this Sukuk can be attributed to ADIB’s clear ESG framework and our strong track record of both growing market share and delivering sustainable returns,” added Al Awadhi.

The issuance was driven by broad demand across three regions, with final allocations of 78 per cent to the Middle East and North Africa (Mena), 13 per cent to Europe nine per cent to Asia and the US. By investor type, private banks received 26 per cent, asset and fund managers 17 per cent, commercial banks 42 per cent and others 16 per cent.

ADIB mandated Standard Chartered Bank as sole global coordinator and sustainability structurer along with ADIB, Emirates NBD, First Abu Dhabi Bank and Sharjah Islamic Bank as joint lead managers and bookrunners.

ADIB sustainable finance framework

ADIB’s inaugural green sukuk issuance is part of its sustainability strategy and was issued in accordance with ADIB Sustainable finance Framework which establishes criteria and eligibility requirements that determine which projects are labelled “green”, “social”, or “sustainable”. The framework determines eligibility of projects for the bank to finance or refinance, including the issuance of Green, Social and Sustainability Sukuks. ADIB received a second party opinion from ISS Corporate Solutions (ISS) for the framework, which ensured alignment of the framework with the ICMA green bond principles, social bond principles, sustainability bond guidelines, as well as the loan market association green loan principles and social loan principles.