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ADIB raises $500m from its first-ever green sukuk

Abu Dhabi bank funding WAM
A view of ADIB branch. The lender's green sukuk will be listed and traded on London Stock Exchange

Abu Dhabi Islamic Bank (ADIB) has raised $500 million through a green sukuk offering, the first ever green USD-denominated sukuk issued by a financial institution. 

The lender priced the five-year senior sukuk at a profit rate of 5.695 percent annually, payable semi-annually.

The sukuk will be listed and traded on London Stock Exchange’s international securities market and sustainable bond market.

The issuance attracted over 100 global and regional investors, with the final order book closing at $2.6 billion. The oversubscription of 5.2 times allowed the final price guidance to be tightened by 30 basis points to 115 basis points over the five-year US treasury rate from initial price thoughts of 145 basis points.

ADIB will allocate an amount equal to the net proceeds of the sukuk to fund eligible green projects to accelerate climate transition. The bank will use the proceeds to provide financing or refinancing of green projects.

The issuance was driven by broad demand across three regions, with final allocations of 78 percent to Mena, 13 percent to Europe, nine percent to Asia and the US. 

The bank last week announced the publication of its debut sustainable finance framework setting up the criteria and eligibility requirements to determine “green, social, or sustainable” projects.

“Having clear and structured criteria for assessing the quality of projects from a sustainability standpoint is essential for informing our decision-making capabilities,” said group CEO Nasser Al Awadhi.