Abu Dhabi Future Energy Company – Masdar, a global leader in renewable energy, has achieved a significant milestone by completing its first-ever green bond issuance.
The issuance amounted to $750 million of 10-year senior unsecured Notes, drawing exceptional interest from regional and international investors. The orderbook peaked at an impressive $4.2 billion, oversubscribing the offering by 5.6 times. This strong demand allowed for pricing to tighten by 35bps between launch and final terms, setting the final landing spread at 115bps over US Treasuries and a coupon rate of 4.875 percent.
Investor confidence in Masdar’s financial strength, as reflected by its credit ratings of A2 (Moody’s) and A+ (Fitch), played a significant role in the bond’s success. Moreover, the company’s strong sustainability credentials aligned with its Green Finance Framework further boosted investor trust.
The net proceeds from this green bond and forthcoming offerings will be exclusively directed towards investing in ‘dark green’ renewable energy projects. Many of these projects will be concentrated in developing economies and climate-vulnerable countries, addressing their critical need for sustainable investments.
The debut green bond issuance is just the initial step in Masdar’s ambitious program to raise up to US$3 billion in bonds. This program aims to meet the company’s equity funding commitments for new renewable energy projects, both domestically and internationally, with a target of achieving a global portfolio of 100GW capacity by 2030.
All proceeds from these bond offerings will be dedicated to the greenest projects in the renewables sector, including solar, wind, renewable power transmission, distribution infrastructure, and battery storage assets. Stringent Environmental, Social, and Governance (ESG) criteria will be applied to ensure that only eligible projects are supported.
Mohamed Jameel Al Ramahi, the Chief Executive Officer of Masdar, expressed pride in the achievement, attributing it to the pioneering spirit of everyone who contributed to growing Masdar into a world-leading renewable energy company over the past 17 years.
Niall Hannigan, the Chief Financial Officer of Masdar, emphasized the positive impact of the projects that will benefit from the bond proceeds, stating they would make a substantial contribution to mitigating climate change while directly benefiting local communities.
The successful bond issuance received a credit rating of A2 from Moody’s and A+ from Fitch, consistent with the company’s corporate credit ratings. The bonds were priced with a coupon rate of 4.875 percent and are set to mature on 25 July 2033.
The issuance was arranged and offered through a syndicate of joint lead managers and bookrunners, including BNP Paribas, Citi, First Abu Dhabi Bank, HSBC, SMBC Nikko, Societe Generale, and Standard Chartered.
Masdar’s Green Finance Framework, introduced in February 2023 and updated in May 2023 to reflect changes to the Green Loan Principles, received a Second Party Opinion from Moody’s, further endorsing its commitment to sustainable investments.
Looking to the future, Masdar is determined to expand its capacity to at least 100GW by 2030, a significant increase from its current capacity of around 20GW. The company’s ambitious goals also include targeting green hydrogen production of 1 million tonnes per annum by the same year, contributing further to the global efforts in combating climate change and advancing renewable energy solutions.