Masdar lists its first green bond on London Stock Exchange

Masdar entered the green bond market with a sale worth USD 750 million and listed the securities on the London Stock Exchange. It said the proceeds are intended for the greenest renewable energy projects.

Abu Dhabi Future Energy Co. – Masdar from the United Arab Emirates issued its first batch of green bonds within a program to raise as much as USD 3 billion. The company intends to grow its global renewable energy portfolio to 100 GW and reach one million tons in annual green hydrogen output by 2030.

Masdar earmarked the proceeds from the initial USD 750 million package for equity funding commitments both in the UAE and abroad. The 10-year senior unsecured notes are now listed on the London Stock Exchange.

Investors were ready to buy 5.6 times more green bonds from Masdar

The offering was oversubscribed by 5.6 times and pricing tightened 35 basis points between the call and the completion of the sale, according to the official report. It means the green debt would cost Masdar less than it initially estimated. The green bond has a spread of 115 basis points over equivalent United States Treasuries and a 4.875% coupon.

Masdar aims to increase its green energy portfolio to 100 GW by the end of the decade

“The demand for green bonds is extremely high and will enable investment in renewable energy projects, many of which will be in developing economies and climate-vulnerable countries. But there is more to do if we are to unlock finance for the energy transition to support the tripling of global renewable energy capacity by 2030,” the company’s Chairman Sultan Al Jaber.

He is also the UAE’s minister of industry and advanced technology, managing director and group chief executive officer of the Abu Dhabi National Oil Co. (ADNOC) and the president-designate of the 2023 United Nations Climate Change Conference (COP28). The event is scheduled to be held from November 30 to December 12 in Dubai. When Masdar was founded in 2006, Al Jaber was its first CEO.

Secondary listing planned before year-end

The company said it plans a secondary listing of its green bond offering this year on the Abu Dhabi Securities Exchange.

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, according to Masdar. Strict ESG (environmental, social and corporate governance) criteria will apply to restrict the eligibility of projects, it added.

Masdar is active in over 40 countries. It said it has a renewable energy project portfolio of 20 GW. In December, Abu Dhabi National Energy Co. (TAQA) and ADNOC joined Mubadala Investment Co., the emirate’s investment fund, as shareholders in the green energy firm.

Green, climate or sustainability-linked bond arrangements are an emerging segment in the global debt market. Companies, governments and financial institutions are turning to the tool to provide funds in line with new, stricter environmental standards. Such projects mitigate climate change and its impact and introduce the principles of circular economy.