Abu Dhabi Commercial Bank (ADCB) has raised USD 500 mn in its first-ever green bond issuance, it said in a statement (pdf) on Thursday. The bonds will be issued this Wednesday, 14 September, the bank said. Strong investor appetite allowed ADCB to lock in better pricing on the issuance than its initial guidance, Reuters reports.

How significant was the demand? The green bond issuance drew more than USD 1.9 bn in orders and was 3.8x oversubscribed, the bank said. The issuance drew a mix of regional and international investors, with one source telling Reuters that the sale had “a very strong following from European accounts.” They added that orders surpassed the USD 1 bn mark after only 90 minutes.

Where’s the money’s going? Proceeds will go towards financing or refinancing green loans eligible under ADCB's green bond framework (pdf), which the lender released earlier this month. Projects eligible for green loans include green building projects, sustainable water treatment initiatives, clean transportation projects, and “pollution prevention initiatives,” the statement said. The bank plans on allocating AED 35 bn (USD 9.5 bn) to green finance by 2030 and separately aims to reach net-zero emissions and cutting financed emissions under to the government’s emissions goals.

Advisers: Barclays and ING were joint sustainability structuring advisers, according to Reuters. ADCB, BofA Securities, JPMorgan, Mizuho and SMBC Nikko were joint lead managers and book runners.

Why this matters: The transaction could open the green bond market for other GCC issuers. In the midst of global market turmoil, a successful issuance from the GCC — and a green one at that — isn’t very ‘2022.’ Issuance volumes in the GCC have plummeted 80% so far this year due to market volatility and rising interest rates. Saudi Arabia and Qatar have both floated the possibility of issuing green bonds in recent months but are yet to pull the trigger amid continued turbulence in the markets.

WILL KSA ALSO ISSUE GREEN BONDS THIS WEEK?

Saudi Arabia’s Public Investment Fund (PIF) could go out with its inaugural green bond offering as early as this week, sources told Reuters on Friday, a day after ADCB’s announcement. The PIF, which hopes to make bns of USD from the sale, has been monitoring the market for months to find “a window” in which to pull the trigger on the issuance, sources said.

It’s still a wait and see situation: The sources noted that the issuance could happen in October, depending on market conditions.

Who’s leading on the issuance? Probably banks that have lent to PIF over the past few years, Reuters speculates, name-checking our friends at HSBC alongside Bank of America, BNP Paribas, Citi, Credit Agricole, JPMorgan, Mizuho, MUFG, Standard Chartered and SMBC.

Background: PIF had released its own green financing framework (pdf) in February ahead of a potential green bond issuance. Projects it plans to fund with the proceeds, include renewable energy projects, green building initiatives, and clean transport projects.