ADCB prices $650 million Green Bond to Support UAE’s transition to NZE

Abu Dhabi Commercial Bank (ADCB) on Wednesday announced that it has successfully priced a $650 million green bond, second in the last 12 months, the proceeds of which will be used to finance eligible green assets as outlined in ADCB’s Green Bond Framework.

The green bond is in line with ADCB’s climate strategy and reflects the Bank’s commitment to supporting customers in the transition to a net zero economy.

ADCB has issued its inaugural $500 million green bond in September 2022 which was well received from the investors. This issuance also underscores ADCB’s commitment to supporting the UAE’s Net Zero by 2050 Strategic Initiative especially when the UAE will be hosting COP28 Summit in November this year.

Following an extensive global investor roadshow, the green bond priced at a spread of 125 bps above US treasuries with a 5.50% coupon rate. It was 2.9 times oversubscribed, attracting interest from a range of local, regional, and international investors that placed total orders of over $1.9 billion.

“This strong demand demonstrates the market’s trust in ADCB’s creditworthiness and the appeal of the Bank’s sustainability initiatives,” ADCB said in a filign to Abu Dhabi Securities Exchange (ADX), where its shares are traded.

ADCB’s return to the green bond market reinforces its commitment to both responsible financing and the advancement of sustainable initiatives that support the UAE’s Net Zero by 2050 Strategic Initiative, the bank said in the statement.

High Credit Ratings

The attractive pricing for ADCB’s green bond is underpinned by the Bank’s robust credit ratings of A/Stable/A-1 from S&P and A+/Stable/F1 from Fitch, as well as strong ESG ratings with an ‘AA’ rating from MSCI and a ‘Medium risk’ classification by Sustainalytics.

Ala’a Eraiqat, ADCB’s Group Chief Executive Officer, said that the bank’s second green bond issuance is a significant development in the delivery of our climate strategy, which is aimed at financing solutions to tackle climate change in support of the UAE Net Zero by 2050 Strategic Initiative. As the UAE prepares to host COP28, ADCB stands ready to support customers on their path to success in a net zero economy.

“The positive response from investors to this issuance reflects the value they see in our approach to green finance. This achievement not only reinforces our commitment to driving positive change, but also demonstrates the market’s recognition of ADCB’s credit and ESG strength, as well as our ongoing efforts to contribute to a more sustainable future,” Eraiqat added.

ADCB’s Group Treasurer Robert Muller said that they were pleased with the pricing achieved for the second green bond, which is a strong endorsement of bank’s increasingly ambitious climate strategy and its credit quality.

“It is also encouraging to see orders from a diverse group of global investors, reflecting confidence in ADCB and its approach to managing ESG risks and opportunities. With ADCB rapidly expanding its portfolio of sustainable assets, green bond issuances are now an established part of our funding strategy,” Muller explained. 

This issuance is linked to the Bank’s commitment to provide $9.53 billion in green finance by 2030. The proceeds will be used to finance eligible green projects in accordance with ADCB’s Green Bond Framework, which aligns with the United Nations Sustainable Development Goals and is based on the International Capital Markets Association (ICMA) Green Bond Principles.

As of 30 June 2023, ADCB’s eligible green loan portfolio had experienced notable y-o-y growth of 61%, reaching $1.65 billion. The two largest constituents of this portfolio are green buildings at 55% and renewable energy at 26%, together accounting for more than 80% of the portfolio.