KSA’s debut green bond sale raised USD 3 bn: Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), sold USD 3 bn in green bonds yesterday, according to Bloomberg. The three-tranche sale — KSA’s first green bond offering — drew in orders of around USD 17.9 bn during the day, according to Reuters.

A breakdown of the sale: PIF sold USD 1.25 bn of its 5-year note at 125 bps over 5-year US treasuries, and another USD 1.25 bn in 10-year green bonds at 165 bps over 10-year US treasuries.

Saudi also issued the world’s first 100-year green note yesterday. It sold USD 500 mn at 6.7%.

The issue seems to have been 6x oversubscribed, drawing in USD 17.9 bn in orders. The 5-year tranche drew more than USD 9 bn in orders, while the 10-year bonds got over USD 7 bn in orders. The 100-year offering drew around USD 1.9 bn in orders. PIF was expected to sell around USD 500 mn of the 100-year notes, Reuters said.

PIF’s initial pricing: The 5-year bonds went on sale at 150 bps over the 5-year US treasuries while the 10-year tranche was initially priced at around 190 bps over the 10-year US treasuries. The 100-year offering initially went for around 7%-7.25%.

What the market said: "Issuance of green bonds appears to be accelerating which is welcome news for a region that has an important role to play in the global (energy) transition," said Dino Kronfol, Franklin Templeton's chief investment officer of global sukuk and MENA fixed income told Reuters. “Notwithstanding the recent increase in rates, they remain low by historical levels. Locking in term funding by selling century bonds will help PIF efficiently finance their multi-decade economic vision,” Doug Bitcon, head of credit strategies at Rasmala Investment Bank told Bloomberg.

The market’s strong appetite for MENA green bonds was expected: Analysts, including EFG Hermes’ head of Macroeconomic Research Mohamed Abu Basha and Arqaam Capital’s Associate Director Noaman Khalid, had predicted a successful sale in light of strong green bond offerings in other regional countries, despite market volatility in bond markets this year. Abu Dhabi Commercial Bank’s (ADCB) USD 500 mn bond sale drew USD 1.9 bn in orders last month. It followed Egypt’s successful sovereign sale back in 2020. For European and US investors in particular, “MENA will give them new exposure from a portfolio diversification point of view,” Khaled told us.

Advisers: BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs and JPMorgan are joint global coordinators and bookrunners, while HSBC, Credit Agricole, First Abu Dhabi Bank, Mizuho, SMBC Nikko, SNB Capital, Societe Generale and Standard Chartered are also bookrunners, with “11 more banks being in on the [transaction],” according to Reuters.