ADCB prices $650mn green bond to support UAE’s net-zero transition

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

Following an extensive global investor roadshow, the green bond priced at a spread of 125 bps above US treasuries with a 5.50 percent 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 US$1.9 billion. This strong demand demonstrates the market’s trust in ADCB’s creditworthiness and the appeal of the Bank’s sustainability initiatives.

This marks ADCB’s second green bond issuance, building on the success of its inaugural US$500 million green bond in September 2022.

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 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.

ADCB CEO Ala’a Eraiqat commented, “ADCB’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.”

Robbert Muller, ADCB Group Treasurer, said, “We were very pleased with the pricing achieved for our second green bond – this is a strong endorsement of our increasingly ambitious climate strategy and our 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. This issuance is linked to the Bank’s commitment to provide AED 35 billion in green finance by 2030. The proceeds will be used to finance eligible green projects in accordance with ADCB’s Green Bond Framework. This framework aligns with the United Nations Sustainable Development Goals and is based on the International Capital Markets Association (ICMA) Green Bond Principles. As of 30th June 2023, ADCB’s eligible green loan portfolio had experienced notable year-on-year growth of 61 percent, reaching US$1.65 billion. The two largest constituents of this portfolio are green buildings at 55 percent and renewable energy at 26 percent, together accounting for more than 80 percent of the portfolio. The impact of this portfolio is substantial, avoiding 119 tonnes of CO2 e per AED 1 million invested."