Arab Energy Fund Issues First $600 Million Bond

The Arab Energy Fund (TAEF), a leading multilateral impact financial institution focused on the MENA energy sector, has successfully priced a $600 million, 3-year bond issuance, reflecting strong performance despite a challenging geopolitical backdrop.

The transaction attracted significant investor interest, enabling the Fund to upsize the offering from its originally planned $500 million. This strong demand resulted in a competitive pricing outcome, which was significantly within the secondary pricing levels.

TAEF Chief Financial Officer Vicky Bhatia said that this transaction reflects both the strength of the Fund’s credit profile and the growing confidence global investors place in its strategy and governance.

Vicky Bhatia added: “Executing this deal under such market conditions is a testament to our investor relationships and disciplined approach to capital markets.”

Transaction Highlights

TAEF’s inaugural public 3-year bond issuance, supporting the development of a benchmark pricing curve for this tenor. It also Achieved highly competitive pricing of Secured Overnight Financing Rate (SOFR) +50bps, despite secondary market spreads being significantly wider.

The strong demand from global investors, including notable participation from high quality investor base was represented by global central banks and Sovereign, supranational, and agency bonds (SSA) institutions.

The intra-day execution strategy ensured optimal timing and minimised market exposure, TAEF explained.

The proceeds from these issuances will directly fund projects aimed at energy sustainability and regional economic development, such as renewable energy infrastructure and grid modernisation. By leveraging its strong credit profile, the Fund is effectively crowding in private capital to sectors critical to decarbonisation.

For instance, a wind farm in Egypt or a solar project in Jordan—both eligible for funding—could now attract co-investment from the global institutions that participated in the bond sale.

According to media reports, the upsized issuances also indicated that the MENA’s energy sector is open for business. For yield-seeking investors, the Fund’s bonds offer a rare combination of:

1. Safety: Triple-A equivalent ratings provide downside protection.

2. Yield: 4.9% for a 5-year bond outperforms many developed-market sovereigns.

3. Alignment with ESG goals: Proceeds are earmarked for sustainability initiatives, appealing to ESG-focused portfolios.

Past Issuances

It may be recalled that the Arab Energy Fund has issued two Green Bonds, each identified by unique International Securities Identification Numbers (ISINs) in 2021 and 2024.

To ensure standardised and transparent reporting, the 2024 year-end report will disclose data for Green Bond 1, covering a 15-month period from the end of the period mentioned in the previous October 2023 report, which quotes the end of September 2023 data, to the end of 2024. Additionally, it will include initial data from Green Bond 2 for the nine months following its issuance. In 2025, a consolidated impact report will provide a full 12-month disclosure for both Green Bond 1 and Green Bond 2.

The Fund remains committed to transparency and accuracy in all disclosures and will announce any adopted amendments on this disclaimer to be aligned with the regulatory or reporting standards.