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The Dubai Islamic Bank (DIB) raised USD 1 bn in its second green sukuk issuance, according to a statement. The 5.5-year notes were sold at 102.4 bps over five-year US treasuries with an annual return of 4.8%. This follows DIB’s maiden green bond issuance in November when the lender raised USD 740 mn. This is the Middle East’s largest ever green issuance by a financial entity, DIB CEO Adnan Chilwan said, according to Khaleej Times.
There was strong investor appetite: The issuance was a little over 3x oversubscribed, with the sale showing “overwhelming” investor interest, Chilwan said. Appetite was particularly strong from investors in the Middle East, Europe, and Asia, the statement noted. DIB’s maiden sukuk issuance was also a little over 2x oversubscribed, drawing more than USD 1.6 bn in orders from would-be investors, we noted in November.
Where is the money going? No details were revealed about how the funding will be used but it is reasonable to infer that the USD 1 bn will be used to fund projects pertaining to renewable energy, energy efficiency, sustainable transport, and other green projects much like the first issuance.
This follows another important issuance in KSA this week: Over in KSA, Saudi Arabia’s sovereign wealth fund the Public Investment Fund sold USD 5.5 bn of green bonds last week. PIF will use the funds from its second issuance in four months to finance or refinance green investments.
The regional green + sustainable bond market is hot: GCC green and sustainable bond and sukuk issuances saw massive growth in volume and value last year, with some USD 8.5 bn raised from 15 issuances — a sizable increase from the USD 605 mn raised from six issuances in 2021. And more is expected down the MENA pipeline as Egypt wants to roll out USD 500 mn in green bonds before the end of the fiscal year — which ends in July 2023.
Advisers: Standard Chartered Bank acted as sole sustainability structurer. Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, KFH Capital, Mashreq, Sharjah Islamic Bank, Standard Chartered Bank and the Islamic Corporation for the Development of the Private Sector were named as advisers, the statement notes.
