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$500m Aldar green bond ‘four times oversubscribed’

W Hotel Abu Dhabi Yas Island Beata Zawrzel via Reuters Connect
Yas Island is one of the destinations of Aldar, which has issued its first green bond
  • Mena investors bought 54% of Aldar’s debut 10-year green sukuk 
  • Proceeds to be invested in green buildings and renewable energy
  • Total value of green bond sukuk issuances rose to $48.5bn in 2022

Aldar Investment Properties – a subsidiary of Abu Dhabi’s biggest real estate developer Aldar Properties – has launched a $500 million 10-year green debut Islamic bond, it said in a stock market filing on Thursday. 

The issuance marks Aldar Properties’ first return to international capital markets since 2019, when it launched its debut 10-year sukuk, also valued at $500 million. 

However, this is the first time Aldar has tapped the green bond market, a sector that is gaining momentum as investors place increasing importance on environmental, social and governance investment activity. 

The total value of green and sustainability bond and sukuk issuances in the GCC reached $48.5 billion in 2022 from 15 deals, up from $605 million in 2021 from six deals, according to data from Bloomberg’s Capital Markets League Tables released in January. 

Saudi Arabia was the leading issuer in the region last year, accounting for more than 50 percent of the totals, while the UAE accounted for the rest, Bloomberg said. 

Notable issuances in 2022 included a $3 billion green bond from the Saudi Public Investment Fund, a $750 million debut sustainable sukuk from Dubai Islamic Bank a $750 million debut sustainable sukuk from Saudi National Bank, and a $500 million green bond from Abu Dhabi Commercial Bank. 

Since the data was published, Saudi Electricity in April completed a $2 billion dual-tranche sukuk, made up of a 10-year green sukuk and 30-year conventional Islamic bond. 

Heavily oversubscribed

Aldar Investment’s green sukuk was launched with a 4.87 percent coupon rate and is among the highest price tightening of any corporate issuance in 2023, Aldar said in a filing to Abu Dhabi Exchange, where its shares are traded. 

The sukuk was more than four times oversubscribed by regional and international investors, with 54 percent of the distribution going to the Middle East and North Africa, 37 percent to Europe, and 9 percent to Asia, Faisal Falaknaz, Aldar’s acting chief finance and sustainability officer, told AGBI

Fund managers and banks represented the largest allocation of the orders. 

The issuance forms part of Aldar Investment’s $2 billion financing programme to support its growth agenda and sustainability commitments. Aldar plans to be a net zero carbon business by 2050, in line with the UAE’s objective to achieve net zero by 2050. 

“The sukuk proceeds will be deployed in line with Aldar’s Green Finance Framework, which governs investment in sustainable projects such as green buildings, property upgrades to enhance energy efficiency, sustainable water management, pollution control measures, and renewable energy sources,” Falaknaz said. 

HSBC and Standard Chartered Bank were joint global coordinators on the issuance, along with Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank and Mashreq as joint lead managers and joint bookrunners.