Masdar Secures a Second Green Bond of $1 Billion Due to High Investor Demand
Masdar, the Abu Dhabi-based renewable energy company, has successfully raised $1 billion in its second green bond issuance. The proceeds from this bond will fund Masdar's equity commitments to new greenfield renewable energy projects, further cementing its role as a key player in supporting an equitable energy transition.
The bond issuance has been divided into two tranches of $500 million each. One tranche offers a coupon of 4.875% for a tenor of 5 years, while the other tranche offers a coupon of 5.25% for a tenor of 10 years. The issuance was more than 4.6 times oversubscribed, indicating strong investor demand.
70% of the investors were institutional backers, while 30% were from the MENA region. This diversity in investor base is reflective of Masdar's global reach and commitment to supporting renewable energy projects in developing economies.
The focus of these projects will be particularly in developing economies, aiming to increase energy access in the Global South and emerging markets. This aligns with Masdar's goal to expand its renewable energy portfolio to 100GW by 2030.
Masdar is jointly owned by Abu Dhabi's National Oil Company ADNOC, Abu Dhabi gas company TAQA, and Abu Dhabi sovereign wealth fund Mubadala Investment Company. The sovereign wealth fund involved in Masdar alongside ADNOC, TAQA, and Mubadala is Mubadala Investment Company.
The second Masdar green bond issuance was rated AA- by Fitch and A2 by Moody's, reflecting the strong financial health and creditworthiness of the company. Fitch recently upgraded Masdar's credit rating one notch to 'AA-', with a stable outlook.
Mohamed Jameel Al Ramahi, CEO of Masdar, stated that the funds will be pivotal in advancing their ambitious renewable energy projects. The bond issuance stands in contrast to global green bond market flows, which remain heavily concentrated in developed markets.
The global green bond market is currently dominated by European issuers, with more than half of the overall market and more than two-thirds of projects funded in developed economies, according to data by the Climate Bonds initiative. However, the success of Masdar's green bond issuance demonstrates the growing interest and potential for green investments in emerging markets.
Green bond issuance has surged since the introduction of Central Bank rate hikes from 2021 on. This increase in green bond issuance is a positive sign for the future of renewable energy projects and the global transition towards a more sustainable energy economy.
