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Monday, 5 July 2021

MENA is getting a taste for green debt issuance

Green debt issuance is on the rise in MENA: The value of green and sustainability-linked debt sales in the MENA region rose by 38% y-o-y in the first six months of 2021, exceeding the total issued in the whole of 2020, according to Bloomberg data cited by Trade Arabia. Some USD 6.4 bn of ESG bonds have been issued so far this year, compared to USD 4.7 bn in the same period last year, according to Bloomberg’s Capital Markets League Tables.

Who contributed to the growth? A USD 3.8 bn loan facility taken on by Saudi Arabia’s Red Sea Development contributed to the majority of this jump. The finance will help fund Red Sea Development’s luxury tourism project, and received green financing accreditation due to the company’s ESG principles.

Egypt led the way regionally in sovereign green bond issuances: The country had the region’s maiden sovereign green bond issuance, listing USD 750 mn in sovereign green bonds last September on the LSE. The issuance was well-received by the market as it was 5x oversubscribed and lured some USD 3.7 bn worth of orders. A second issuance is in the pipeline during the FY2021-2022, Finance Minister Mohamed Maait said last month, yet noted that the offering was not yet settled.

Corporate green bonds saw their debut here last week: CIB is going ahead with the country’s first-ever corporate green bond sale, issuing USD 100 mn of the climate-linked securities, all of which is being snapped up by the International Finance Corporation.

Gulf lenders joining the fold: First Abu Dhabi Bank (FAB) issued the region’s first CHF-denominated green bonds in January, raising CHF 260 mn Swiss (or USD 292.1 mn), before issuing bonds worth CNY 150 mn in June in what was the first yuan-denominated green bond sale in MENA. In March, Emirates NBD was responsible for the region’s first sustainability-linked loan to refinance existing debt, borrowing USD 1.75 bn.

Putting this all in perspective: The MENA region still accounts for only a fraction of global green debt issuance, which stood at USD 541 bn during the first six months of the year.

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