Masdar taps green debt market to finance expansion

Amr Alfiky/Reuters

• $1bn raised through dual tranches
• ‘Strong appetite’ from investors
• Proceeds will finance greenfield projects

Masdar, the UAE’s state-backed clean energy company, has raised $1 billion through its second green bond issuance, made up of dual tranches of $500 million each.

The bonds are part of a larger programme to raise up to $3 billion to fund its renewables projects.

The bonds, of five and 10 years, met strong appetite from regional and international investors, the company said.

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On average, 70 percent of those interested were international investors, with Mena investors representing 30 percent.

The order book peaked at $4.6 billion, while the bonds, rated AA- by Fitch and A2 by Moody’s, were oversubscribed 4.6 times. 

Proceeds from the sale will be used to finance Masdar’s commitments on new greenfield projects, including several in developing economies, the company said.

The base offering circular, seen by AGBI, said that projects may include renewable energy generation in the form of solar panels; solar CSP, which converts energy from sunlight to power a turbine; and wind power, as well as power transmission and distribution network infrastructure and energy efficiency schemes.

Masdar, which is owned by the Abu Dhabi National Energy Company (Taqa), the Abu Dhabi sovereign fund Mubadala and the Abu Dhabi National Oil Company (Adnoc), aims to buy stakes in 100 gigawatts of clean projects around the world, with a special focus on the US and the global south.

At the end of March, the company had ownership in 83 projects globally. 

Last year, Masdar raised $750 million through its inaugural 10-year senior unsecured green bond, which was 5.6 times oversubscribed.

The 2023 Masdar Green Finance report said the proceeds had been used to fund projects in Uzbekistan, Azerbaijan and the UAE.

The projects, with 3.7GW in total nominal capacity, are expected to mitigate 5.4 million tonnes of greenhouse gas emissions annually when fully operational.

Mazin Khan, Masdar’s chief financial officer, said: “We are raising green bonds and other green finance instruments to invest in new dark green projects.”

Green bonds are a fixed-income instrument designed to fund specific climate-related or environmental projects.

• Masdar-backed UK wind farm clears further hurdle
• BP joins Masdar in Egyptian green hydrogen project
• Adnoc secures $3bn to advance decarbonisation plan

In 2023, the Middle East accounted for less than 3 percent of global green, social, sustainability and sustainability-linked bonds issuance, although the market is expanding.

Demand for loans from oil and gas companies fell 6 percent in 2023, and the trend is likely to continue this year. However, companies including Saudi Aramco and Adnoc have also tapped into bond markets.

Aramco, the world’s largest oil producer, announced on Thursday that it had completed a senior unsecured US dollar-denominated bonds issuance of $6 billion.

The offering was more than six times oversubscribed, based on the initial targeted size of $5 billion.

Adnoc issued the exchangeable bonds in 2021 and offered about 375 million shares in Adnoc Distribution.

In June this year the UAE’s oil giant confirmed that it had fully redeemed its bonds and paid bondholders a total of almost $1.2 billion in cash, retaining full ownership of the underlying Adnoc Distribution shares.