Masdar's Green Bond Issuance Highlights Commitment to Sustainability and Renewable Energy Expansion in the UAE
In a significant advancement for sustainable finance, the Abu Dhabi Future Energy Company PJSC, known as Masdar, has successfully executed its third green bond issuance, raising an impressive US billion. This venture not only marks a pivotal moment for the company but also pushes its total green bond financing to an extraordinary US.75 billion since the programme’s inception in 2023.
The recent bond issuance was structured in two equal tranches of US0 million, featuring tenors of five and ten years, accompanied by attractive coupon rates of 4.875% and 5.375% respectively. Such favorable conditions indicate robust investor confidence, as the issuance was met with overwhelming interest—oversubscribed by a staggering 6.6 times. This high demand not only underscores Masdar’s growing stature in the renewable energy sector but also achieved the company’s tightest pricing spreads to date, illustrating a keen investor appetite for green financing in the current market.
The proceeds derived from this bond issuance are earmarked exclusively for greenfield renewable energy projects under Masdar’s well-defined Green Finance Framework. Recently, this framework has undergone an expansion in its eligibility criteria, now encompassing green hydrogen initiatives and standalone battery storage projects. This strategic inclusion marks a critical step toward diversifying the types of renewable energy initiatives being financed and showcases Masdar’s responsive approach to evolving market dynamics.
Masdar’s Chief Executive Officer, Mohamed Jameel Al Ramahi, emphasized the significance of this successful issuance, stating, “This third issuance demonstrates the continued and growing confidence the investment community places in Masdar’s financial strength and long-term vision.” His remarks reflect a broader sentiment within the industry, highlighting the increasing recognition of the essential role that sustainable finance plays in combating climate change and transitioning to a low-carbon economy.
The allocation of the bonds has been characterized by strong international interest, with a striking 85% of the bonds being acquired by investors outside the MENA (Middle East and North Africa) region. This is indicative of a global recognition of Masdar as a leader in sustainable finance, positioning the company favorably on the international stage. The remaining 15% of the bond offerings were absorbed by investors within the MENA region, further solidifying regional support for Masdar’s mission.
In addition to its green bond activities, Masdar is actively pursuing other financing avenues, having secured an impressive US billion in non-recourse financing in 2024. This funding is pivotal for the development of over 11 gigawatts of clean energy capacity across diverse geographical locales, underscoring Masdar’s commitment not only to its home base in the UAE but also to global renewable energy initiatives.
Masdar’s green bond issuance is bolstered by a strong credit rating, with an AA- from Fitch and an A1 from Moody’s. This robust standing has been further reinforced by the management of the issuance by a distinguished consortium of financial institutions, including First Abu Dhabi Bank, J.P. Morgan, and several other international banks, further solidifying Masdar’s prominent position in the realm of sustainable finance.
The impressive trajectory of Masdar’s green bond programme exemplifies a wider trend towards responsible investment that resonates deeply with investors across the globe. As stakeholders increasingly prioritize sustainability, the company stands at the forefront, driving innovation and investment in renewable energy solutions that align with global efforts to mitigate climate change.
In conclusion, Masdar’s recent success in securing US billion through the issuance of green bonds not only highlights the company’s commitment to fostering a sustainable future but also positions it as a key player in the broader context of global renewable energy advancements. With a clear focus on expanding its renewable energy portfolio and adapting to market needs, Masdar is poised to lead the way in sustainable finance in the UAE and beyond.
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