VIENNA, 20th January, 2023 (WAM) — The OPEC Fund for International Development priced its inaugural benchmark bond issue in the capital markets on Wednesday. The bond was priced using its Sustainable Development Goal (SDG) bond framework on which Credit Agricole CIB acted as sole sustainability advisor.
Attracting strong demand from investors globally, the 3-year fixed-rate sustainability bond raised US$1 billion, which will be used to finance or refinance key sustainable development projects that are aligned with the OPEC Fund’s multi-sectoral development mission and directly contribute to achieving the SDGs.
The bond attracted very broad interest with 52 percent of investors coming from Europe, Middle East and Africa (EMEA), 27 percent from Asia-Pacific (APAC) and 21 percent from North America (NAM). In terms of investor type, central banks & official institutions accounted for 62 percent, banks 19 percent, asset managers 9 percent and insurance/pension funds for 8 percent.
Dr. Abdulhamid Alkhalifa, OPEC Fund Director-General, said, “The robust demand for our inaugural benchmark is testament to the confidence that investors have in the OPEC Fund and our long-standing development-focused mandate. It also confirms the appetite for sustainable investments globally. At a time when there is an increasing need for development finance, the OPEC Fund is proud to have achieved this milestone. It will allow us to mobilise additional funds in support of our partner countries. The OPEC Fund has a 47-year track-record in delivering successful development outcomes and the additional funds will enable us to further deepen our impact.”
The OPEC Fund is financing development projects in low- and middle-income countries in line with its South-South cooperation mandate. The bond proceeds will be allocated according to the specific criteria defined in the SDG Bond Framework focusing on food security, healthcare, infrastructure, education, employment and renewable energy. The Framework is aligned with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021 and Social Bond Principles 2021 published by the International Capital Market Association (ICMA) and has received a positive opinion from the Second Party Opinion Provider Sustainalytics.
The success of the debut benchmark bond was supported by the OPEC Fund’s AA+ (Stable) rating from Fitch Ratings and AA (Positive) from S&P Global Ratings, which reflect the Fund’s prudent financial risk profile, excellent capitalisation, conservative liquidity and risk management, preferred creditor treatment as well as diversified portfolio of purpose related assets.
Tarek Sherlala, OPEC Fund Assistant Director-General, Financial Operations, added, “These increased financial resources will enable us to step up delivery in partner countries and help boost our development impact. The support of global investors will add to our credit strength and move us to a new phase in our delivery of impactful and sustainable development cooperation.”
Martine Mills, OPEC Fund Head of Funding, said, “This bond pricing is a major milestone for the OPEC Fund and the culmination of several years of intensive work. The success of our debut bond in the current market environment is a testament to the strength of our credit. We are pleased to join the community of multilateral development banks issuing in the capital markets. This is an important step in the establishment of our borrowing programme and we look forward to continuing our engagement with investors going forward.”