The Emirate of Sharjah, one of the seven emirates that make up the United Arab Emirates (UAE), has initiated the sale of a €500 million (US$541 million) sustainable bond. The Sharjah Finance Department is spearheading the issuance, which falls under the emirate's Global Medium Term Note Programme.
Details regarding the final price of the bond are still under determination. However, a notice from HSBC, acting as the stabilization coordinator, on the London Stock Exchange indicated that initial price guidance for the 6. 5-year debt deal was set at around 220 basis points (bps) over mid-swap.
Positive investor response has been evident, with IFR reporting that order books had surpassed €1. 5 billion by mid-morning on the offering day. The proceeds from the bond issuance will be directed towards financing or refinancing eligible expenditures outlined within the emirate's Sovereign Sustainable Financing Framework.
This framework, established by Sharjah, specifies how the emirate will utilize funds raised through sustainable bonds to finance initiatives that align with its environmental and social goals. The framework emphasizes responsible use of proceeds towards projects that contribute to sustainable development.
Sharjah's foray into the sustainable bond market signifies the emirate's growing commitment to environmental and social responsibility. It also highlights the increasing investor appetite for sustainable investments in the region. This issuance is likely to pave the way for other emirates and GCC countries to explore similar sustainable financing avenues.
The issuance process is being overseen by a consortium of banks, including HSBC, which is acting as the stabilization coordinator and joint lead manager. Additionally, BNP Paribas, Citigroup, Dubai Islamic Bank, Emirates NBD, First Abu Dhabi Bank, ING, JP Morgan, Natixis, SMBC Nikko, and Standard Chartered Bank are involved as joint lead managers.
The successful placement of this sustainable bond will not only provide Sharjah with a significant source of funding for its sustainable development initiatives but also serve as a benchmark for future sustainable bond issuances in the region. It underscores the growing importance of sustainable finance in the UAE and the wider GCC as they strive to diversify their economies and promote environmentally and socially responsible practices.