PIF is prepping its second green bond sale

KSA’s PIF plans fresh USD 5.5 bn green bond issuance: The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, is reportedly planning to sell USD 5.5 bn of green bonds, Reuters reports, citing an investment bank working on the issuance. The planned sale would be PIF’s second green bond issuance in four months, the newswire notes, after it took its maiden issuance to market in October. No details on the expected timeline of the sale were disclosed.

The details: PIF plans to sell USD 1.75 bn of seven-year notes at 115 bps over US Treasuries, USD 2 bn in 12-year bonds at 145 bps over USD Treasures, and a third USD 1.75 bn tranche of 30-year bonds carrying an interest rate of 185 bps over US Treasuries. “Each tranche will be of benchmark size, which typically means at least USD 500 mn,” Reuters reports.

There’s already strong appetite: The offering is c.5.9x oversubscribed, with a combined USD 32.5 bn in orders, according to the investment bank. The seven-year notes drew in USD 15.2 bn in orders, while the 12-year notes drew more than USD 9.8 bn in orders, and the 30-year tranche saw USD 7.5 bn in orders, Reuters reports.

That appetite was broadly expected, following a strong 2022 for MENA’s green debt market: Following a “positive” 2022 for MENA’s ESG debt sales with strong investor interest in green instruments, 2023 is likely on track to see more issuances with healthy appetite, head of MENA Debt Capital Markets at HSBC Khaled Darwish previously told Enterprise Climate. The first six weeks of the year alone saw Saudi National Bank’s maiden USD 750 mn ESG sukuk, Saudi’s Riyadh Bank USD 750 mn issuance of its first Tier 1 capital instrument as a sustainable sukuk, and Abu Dhabi’s Sweihan PV Power Company sale of amortizing green bonds — which raised almost USD 701 mn — for its Noor Abu Dhabi solar plant project. The region’s green debt market saw a lull for a few months as market turmoil hit on the back of the Russia-Ukraine war, but the second half of the year came back strong with issuances including Morocco’s local rail operator Office National des Chemins de Fer du Maroc issuing the country’s first green infrastructure bond of MAD 1 bn (roughly USD 95 mn). Abu Dhabi Commercial Bank also raised USD 500 mn through its first-ever green bond sale in September, while Dubai Islamic Bank sold USD 750 mn of its debut sustainable sukuk in November.

Advisors: Goldman Sachs, JPMorgan, and Standard Chartered Bank are joint global coordinators on the sale, while BofA Securities, BNP Paribas, Citi, First Abu Dhabi Bank, HSBC, and Morgan Stanley are active bookrunners. Credit Agricole, GIB Capital, ICBC International Securities, Mizuho, SMBC Nikko, and Societe Generale have also been tapped as passive bookrunners, according to Reuters.