‘Strong pipeline’ of green bonds likely from Middle East in 2023, S&P says

There is likely to be a “strong pipeline” of sustainable bonds coming from the Middle East this year, according to S&P Global Ratings, as the region continues to focus on the green economy.

The wider Europe, Middle East and Africa region accounted for the biggest share of green, social, sustainable and sustainability-linked bonds (GSSSB) worldwide in 2022, at 48 per cent, the ratings agency said in a report on Wednesday.

“Green bonds in the use-of-proceeds category will continue to lead issuance in Emea region in 2023, in our view,” the report said.

“This should be driven by the focus on credible net zero plans by issuers, the European Central Bank’s intent to green its bond-buying programme, and the implementation of the EU Taxonomy and EU green bond standards.”

Issuers are also increasingly looking to finance projects related to biodiversity enhancement and preservation, it added.

The market for green and sustainable bonds and sukuk in GCC economies set a record in 2022 amid increased participation from banks and government-related entities, according to data from Bloomberg’s Capital Markets League Tables.

Total GCC green and sustainable bond and sukuk issuances last year reached $8.5 billion from 15 deals, compared with $605 million from six deals in 2021.

Saudi Arabia was the leading issuer within the region, accounting for more than half of the total volume, with the UAE accounting for the remaining issue volume, it said.

In October, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, listed its debut $3 billion green bond on the London Stock Exchange. The transaction was more than eight times oversubscribed, with orders exceeding $24 billion, the state-run Saudi Press Agency reported at the time.

In November, Dubai Islamic Bank, the UAE’s biggest Sharia-compliant lender by assets, raised $750 million through the sale of its debut sustainable sukuk.

In January last year, Abu Dhabi National Energy Company, better known as Taqa, together with Emirates Water and Electricity Company, also raised $700.8 million through its first green bond.

Meanwhile, Abu Dhabi’s clean energy company Masdar plans to raise money through the issuance of a green bond this year, the company’s chief executive said last month.

The size of the planned bond was not disclosed.

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