UAE leads regional green bond issuance in 2023

Green bonds are a growing category of fixed-income securities, which raise capital for projects with environmental benefits.

The UAE led regional green bond league tables in 2023, with sales reaching $10.7 billion, up nearly 170 per cent and accounting for approximately 45 per cent of regional totals, a report showed on Thursday.

According to data from Bloomberg’s capital markets league tables, annual issuances of green social, sustainable, and sustainability-linked bonds (GSSB) in the Middle East and North Africa (Mena) hit a new record in 2023 of approximately $24 billion. The 155 per cent increase was driven primarily by growth in the UAE and Saudi Arabia, which together accounted for 77 per cent of total regional issuances.

The year in which the UAE hosted COP28 was notable for the large number of debut sustainable debt issuances from the country’s corporates and government entities, which amounted to $7.95 billion in total. The 11 debut green issuers included bonds or sukuk from DP World sukuk ($1.5 billion), Sharjah government ($1 billion), Taqa ($1 billion), Emirates NBD ($750 million), Masdar ($750 million), Mubadala ($750 million), Aldar sukuk ($500 million), Commercial Bank of Dubai ($500 million) and Five Holdings ($350 million), in addition to green sukuk from Dubai Islamic Bank ($750 million) and Abu Dhabi Islamic Bank ($500 million)

Saudi Arabia accounted for 32 per cent of total regional volumes, up 69 per cent year-on-year. Saudi Arabia’s Public Investment Fund was the region’s largest issuer in 2023, driven by issuances of $5.5 billion in February 2023. Other notable Saudi issuers were Saudi National Bank ($60.69 million), Saudi Electricity Company ($1.2 billion) and Al Rajhi Bank ($1 billion).

2023 was a milestone year for green Sukuk as Islamic issuances accounted for more than a quarter of Mena totals for the first time. Green sukuk totalling approximately $6.5 billion were issued in the Mena region in 2023, representing more than half of all global green sukuk, with notable sales by ADIB ($500 million), DP World ($1.5 Billion), First Abu Dhabi Bank (around $350 million), Majid Al Futtaim ($500 million), and Aldar ($500 million).

Venty Mulani, data specialist – sustainable fixed income, Bloomberg LP, said: “2023 was a record-breaking year for green bonds in the Mena region. A wave of UAE corporates made their debuts as the country geared up to host to COP28, while Saudi Arabia accounted for approximately a third of total regional sales. As COP moves from the Mena region for the first time in two years, the direction of the green bond market in 2024 will be shaped by developments in borrowing costs, regulations, and taxonomies.”