Abu Dhabi’s NBAD opens sale of Middle East’s first green bonds

28/03/2017 05:51 AST

National Bank of Abu Dhabi PJSC is selling the Middle East’s first green bond, where proceeds must be used to fund environmental projects, as governments in the region look to curb dependence on oil for their energy needs.

The state-owned lender is giving price guidance on the five-year securities of 105 basis points over the midswap rate with a final price likely on Tuesday, according to two people with knowledge of the plan who asked not to be named because the information is private. The sale of dollar-denominated notes will be benchmark-sized, or at least $500 million, they said. While Abu Dhabi holds six per cent of the world’s oil reserves, it’s seeking to diversify its energy sources, prompting a series of sustainable projects such as development of a 1,177-megawatt solar plant by Marubeni Corp., China’s JinkoSolar Holding Co and the Abu Dhabi Water and Electricity Authority. The deal also comes amid a surge in the size of the global market for green bonds which doubled to $95 billion last year, according to Bloomberg New Energy Finance. Moody’s Corp. is projecting that it will double again this year.

NBAD is also poised to complete a $175 billion merger with rival First Bank PJSC, creating the second-biggest bank in the Gulf after Qatar National Bank SAQ, as a halving of oil prices since 2014 spurs consolidation and efficiency drives across the energy-exporting region.

NBAD, rated the fourth-highest investment grade at Moody’s Investors Service, is a regular issuer of bonds and raised $885 million from the sale of 30-year bonds listed in Taipei in January. HSBC Holdings Plc and NBAD are the joint structuring advisers for the green bonds, while Bank of America Merrill Lynch, Citigroup Inc., Credit Agricole CIB, Mitsubishi UFJ Financial Group Inc. along with HSBC and NBAD are the joint lead arrangers of the issue.

Gulfnews