Masdar Raises US$750 Million Green Bond

Abu Dhabi Future Energy Company PJSC – Masdar announced the successful completion of its first green bond issuance for US$750 million 10-year senior unsecured Notes today. Showing positive appetite from regional and international investors, the order book peaked at US$ 4.2 billion, i.e. oversubscription of 5.6x. Pricing tightened 35 bps between launch and final terms, with a final landing spread of 115 bps over the US Treasuries and a coupon of 4.875 per cent. Allocation was finalized with a split of 87.5 per cent to international investors and 12.5 per cent to MENA investors.

The investor confidence in the financial strength of Masdar is reflected in the investor confidence, which has credit ratings of A2 (Moody’s) and A+ (Fitch), and its strong sustainability credentials. In line with Masdar’s Green Finance Framework, net proceeds from this bond and future offerings will exclusively fund ‘dark green’ renewable energy projects. Many of these projects will be in developing economies and climate-vulnerable countries that have a critical need for investment.

The US$750 million Masdar green bond is the first part of a program to raise US$3 billion of bonds to meet the country’s equity funding commitments on new renewable energy projects at home and overseas, as it seeks to grow its global portfolio to 100 GW of capacity by 2030. Proceeds from all bond offerings under the program will be deployed towards the greenest projects in the renewables sector, namely solar, wind, renewable power transmission and distribution infrastructure, and battery storage assets. Strict ESG criteria will apply to check the eligibility of projects.

Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, Chairman of Masdar and COP28 President-Designate, said, “It is vital to make finance more available, accessible and affordable for developing economies if we have any chance of meeting climate goals to supercharge sustainable development. Ahead of the UAE hosting the UN climate change conference, COP28, we must champion initiatives that advance climate finance and decarbonization. Today, the successful issuance of Masdar green bonds will support these twin aims, by helping to provide funding towards renewable energy projects where they are needed most.”

Niall Hannigan, Masdar’s Chief Financial Officer, commented, “The proceeds from our inaugural bond offering will be deployed in developing new renewable energy projects around the world.” He added, “We remain committed to maintaining a prudent approach to funding our ambitious growth plans, which includes maintaining our investment grade credit ratings from Fitch and Moody’s.”

The bond was rated A2 by Moody’s and A+ by Fitch, in line with the corporate credit ratings of the company. Further, it was priced at a coupon rate of 4.875 per cent with maturity on 25 July 2033.

The issuance was arranged and offered through a syndicate of joint lead managers and book runners comprising BNP Paribas, Citi, First Abu Dhabi Bank, HSBC, SMBC Nikko, Société Générale and Standard Chartered.

Masdar’s Green Finance Framework, established in February 2023, was updated in May 2023 to reflect changes to the Green Loan Principles. Moody’s has issued a Second Party Opinion on the Green Finance Framework.

Established in 2006, Masdar is the UAE’s clean energy powerhouse. It is active in over 40 countries and has invested in a portfolio of renewable energy projects with a combined capacity of around 20GW. Masdar aims to grow this to at least 100GW by 2030. The company is also targeting green hydrogen production of 1 million tonnes per annum by the same year.