Sobha Realty issues $750m green sukuk, largest by real estate developer

Dubai: Sobha Realty has successfully completed a $750 million Green Sukuk issuance, the largest in the company's history and the biggest such issuance by a real estate developer globally.

The five-year Islamic bond was issued under Sobha’s $1.5 billion Trust Certificate Issuance Programme and will be dual-listed on the London Stock Exchange and Nasdaq Dubai.

The issuance attracted strong demand, with the order book reaching approximately $2.1 billion—2.8 times the issue size. As a result of the high interest, the pricing tightened by 50 basis points from the initial guidance.

The Sukuk was priced at a profit rate of 7.125% per annum, with an effective yield of 7.375%. Regional investors took up 56% of the allocation, while 44% went to international participants.

Proceeds from the Sukuk will be used to finance or refinance projects that meet eligibility criteria outlined in Sobha Realty’s Green Financing Framework. The framework follows internationally recognised guidelines, including the International Capital Market Association (ICMA) Green Bond Principles and the Loan Market Association (LMA) Green Loan Principles.

An independent Second Party Opinion was provided by DNV to confirm alignment with best market practices. The Sukuk is expected to receive credit ratings of Ba2 (Stable) from Moody’s and BB (Stable) from S&P, consistent with the ratings of the obligor, PNC Investments LLC.

The issuance involved a consortium of regional and international financial institutions. Dubai Islamic Bank, Emirates NBD Capital, J.P. Morgan Securities, Mashreqbank, and Standard Chartered Bank acted as Joint Global Coordinators.

A broader group of 13 banks, including First Abu Dhabi Bank, Deutsche Bank, and Abu Dhabi Commercial Bank, served as Joint Lead Managers and Bookrunners. Deutsche Bank and Emirates NBD Capital also acted as Joint ESG Structuring Coordinators. Legal advisory was provided by Clifford Chance and Dentons, with Grant Thornton appointed as auditor.

The issuance comes amid growing interest in sustainable finance instruments in the Middle East, as corporates align capital-raising efforts with environmental, social, and governance (ESG) goals.