Abu Dhabi: ADX-listed Abu Dhabi Islamic Bank (ADIB) raised $500 million via a green Sukuk offering, marking the world’s first ever green US dollar Islamic bond issued by a financial institution. ADIB priced the five-year senior sukuk 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 evinced interest from over 100 global and regional investors with the final order book closing at $2.6 billion, representing an oversubscription rate of 5.2 times. This has 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.
The lender 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.
Interest from regional, international investors
Nasser Al Awadhi, ADIB Group CEO, said: “We’re 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.”
“We have received exceptional interest from a broad range of domestic, regional and international investors,” Al Awadhi said. “We’re also pleased to see this strong international demand continue as the pricing was tightened significantly.”
The issuance was driven by broad demand across three regions, with final allocations of 78 per cent to the MENA region, 13 per cent to Europe 9 per cent to Asia and US. By investor type, the break-up stands at: private banks 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 the issuance’s 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.
On Tuesday, the UAE's fifth auction of Islamic Treasury sukuk (T-sukuk) received bids worth Dh5.77 billion, an oversubscription of 5.2 times, with strong demand on both the 2- and 3-year tranches. The success is reflected in the attractive market driven prices.