Tabreed's $700M Green Sukuk: A Sustainable Milestone
Tabreed raises $700 million through its inaugural green sukuk, marking a significant step in sustainable financing.
Summary
Tabreed successfully issues a $700 million green sukuk, reflecting strong investor confidence and commitment to sustainable projects.
Abu Dhabi-based National Central Cooling Co. PJSC, better known as Tabreed, has solidified its position as a leader in sustainable finance with the successful issuance of a $700 million green sukuk. This marks the first issuance under its newly established $1.5 billion trust certificate issuance programme. The sukuk, which will be listed on the London Stock Exchange's International Securities Market, was met with overwhelming demand, being oversubscribed by 2.6 times, reflecting strong investor confidence in Tabreed's financial health and strategic direction.
Tabreed's green sukuk issuance is a testament to the growing appetite for environmentally-friendly investment opportunities. The company plans to use the proceeds in line with its Green Financing Framework, which is aligned with the ICMA Green Bond Principles and the Loan Market Association's Green Loan Principles. This framework ensures that the funds will be directed towards projects that promote energy efficiency, water conservation, and sustainable district cooling solutions.
The competitive pricing of the sukuk, with a profit rate of 5.279%, underscores Tabreed's strong credit fundamentals. The issuance achieved the tightest ever credit spread for a five-year instrument by a UAE corporate sukuk with a similar credit rating. This has been supported by investment-grade ratings from Moody's and Fitch, affirming the company's financial stability and growth potential.
Historically, Tabreed has been a pioneer in the sukuk market, setting precedents with its innovative financial instruments. The company's strategic focus on sustainability aligns with global trends towards green finance, enhancing its appeal to environmentally-conscious investors.
Given the strong demand for the sukuk and Tabreed's solid financial performance, investors might consider holding their positions. The company's focus on sustainable projects and its robust financial health suggest potential for long-term growth.
Source
Summary
Tabreed, a leading district cooling company, successfully raised USD 700 million through its inaugural five-year green sukuk, marking the first issuance under its new USD 1.5 billion trust certificate program. The sukuk will be listed on the London Stock Exchange's International Securities Market. The issuance attracted strong demand from local, regional, and international investors, leading to a 2.6 times oversubscription. It was competitively priced with a profit rate of 5.279%, achieving the tightest credit spread for a five-year instrument by Tabreed or any other UAE corporate sukuk with a similar credit rating. The high demand was supported by investment-grade credit ratings from Moody's and Fitch. Proceeds from the sukuk will be used in accordance with Tabreed's Green Financing Framework to finance or refinance eligible green projects, including district cooling schemes, energy and water efficiency, and wastewater management projects.
