Dubai, UAE — First Abu Dhabi Bank (FAB) has raised $600 million from an offering of a five-year bond, which is the first green bond issued by a financial institution in the MENA region in 2023.
The green bond was upsized to $600 million from the initial $500 million after the orderbook was oversubscribed 2.8 times. The green bond issue was well-received by investors, with demand reaching $1.4 billion.
The proceeds from the bond sale will be used to finance environmental projects that are aligned with FAB’s Sustainable Finance Framework. The bank aims to become a zero-emissions bank by 2050.
A substantial 85 percent of the allocation went to international investors, the highest achieved by a MENA issuer in 2023.
The bank said that 34 percent of the allocation was dedicated to green investors. The bond has been priced at 5bps inside FAB’s existing US dollar curve.
FAB has used the proceeds from these bonds in investments in renewable energy, such as solar and wind power; improvements to energy efficiency in buildings and vehicles and support for sustainable transportation, such as public transit and electric vehicles.
Between 2018 and June 2023, the bank issued green bonds worth $3.3 billion. In October 2022, the bank sold green bonds for $700 million.
The green bond issue is part of a broader trend of banks issuing debt to finance environmental projects. In 2022, global green bond issuance reached $1.4 trillion, a record high. This trend is expected to continue in the years to come, as banks and other financial institutions seek to align their portfolios with the goals of the Paris Agreement.
Rula AlQadi, Group Treasurer at FAB, said, “We were pleased with the strong international participation and especially from Asian investors, who supported the deal despite the 25bps price tightening.”
The 5-year Green Bond represents the bank’s third successful public issuance in the USD market in 2023, showcasing FAB’s credit strength and market position.
