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CASE STUDY: NBAD Blazes a Trail with First MENA Green Bond

UAE-based lender National Bank of Abu Dhabi (NBAD) broke new ground by becoming the first MENA issuer to tap the green finance markets with a debut US$587mn 5-year green bond. The deal marked the largest size and tightest spread for an FI green issuance across the emerging market space, excluding China.

May 17, 2017 // 3:30PM


In Spring of 2017, NBAD revived plans initially launched in late 2016 to cement its position at the forefront of financial innovators in the Middle East and to further diversify its own financing sources and investor make-up.

On 30th of March 2017, the bank priced its inaugural US$587mn green bond, at the tight end of the MS+105bp area initial price thoughts (IPTs), achieving a double-digit spread inside 100bp.

Despite global markets opening the week on a cautious tone following the Trump administration’s setback in passing the healthcare reform bill and associated concerns around the administration’s ability to implement its fiscal stimulus agenda, the transaction was deemed a success as NBAD managed to accumulate well diversified quality orders from the Middle East, Europe, Asia, and across the investor type spectrum.

Transaction Breakdown

Following a number requisite disclosure modalities in relation to NBAD’s merger with FGB, NBAD announced a transaction on Monday 27th of March, releasing Initial Price Thoughts of MS+105bp area, at 11.45am Abu Dhabi, for a US dollar Benchmark RegS senior unsecured Green Bond.

The final size of the transaction was capped at US$587mn, the total amount of eligible green assets on NBAD's books at the time of pricing. The 5-year tenor was in line with the previous issuances by NBAD.

As a regular issuer, NBAD was able to execute the transaction intraday without prior roadshow, on the back of a recently conducted fixed income investor meetings in Europe and Asia in Q3 2016.

NBAD’s credit strengths were instantly reflected in positive engagement from investors and, as momentum continued to build up, NBAD was able to release final price guidance less than four hours after the release of IPTs, of MS+100bp (+/- 2bp). The deal was launched and priced at the tight end of the guidance at MS+98bp. The final pricing achieved a tight double-digit spread inside 100bp, compressing 7bp from the MS+105bp area IPTs.

Half of the notes were place with accounts in Europe, with another 27% snapped up by MENA investors and a further 23% allocated to accounts in Asia.

About 48% of the notes were allocated to fund managers and hedge funds, another 40% with banks, with the rest spread between pension & insurance funds (7%) and private banks (5%).

The issuance marked the tightest spread and largest Green Bond issued by an FI in Emerging Markets (excluding-China), and the tightest spread achieved by a Middle Eastern FI for a public capital markets issuance since NBAD’s US$750mn Eurobond issuance in February 2015.

Middle East Sustainable Finance CEEMEA CEE & Turkey

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