Is Majid Al Futtaim gearing up for a third green sukuk issuance? UAE retail conglomerate Majid Al Futtaim has selected banks to coordinate and manage its upcoming benchmark 10-year USD green sukuk issuance, Reuters reports, citing an indicative term sheet it has seen. A benchmark-sized issuance typically means at least USD 500 mn, the newswire notes.

Which banks are involved? Citigroup, HSBC, and Standard Chartered have been appointed as coordinators on the issuance, and they will be joined by Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, and First Abu Dhabi Bank as lead managers, according to the newswire.

Where’s the money going? Proceeds from the sukuk sale will go towards funding or refinancing green projects under the company's 2019 Green Finance Framework (pdf), through which the retail conglomerate has so far raised a total of USD 1.2 bn. The framework identified four areas for improving the company’s green performance: Green buildings, renewable energy, sustainable water management, and energy efficiency.

Al-Futtaim was the first to issue corporate green sukuk in MENA: The company’s USD 600 mn 10-year green sukuk issuance in May 2019 —- which was 4.6x oversubscribed — was a pioneering initiative in the region and set the stage for others looking to diversify their green financing instruments, according to a case study (pdf) by UK-UAE think tank Posterity Institute. The bond was priced at around 4.6% and received orders in excess of USD 2.8 bn. The company raised another USD 600 mn through green sukuks in the same year, according to a summary report (pdf) by the UAE’s Climate Change and Environment Ministry. The combined USD 1.2 bn issued by Futtaim in 2019 made up 30% of total ESG sukuk issuance by value that year.

REMEMBER- Interest in green sukuk has been on the rise in the region in recent months ahead of COP28 in the UAE. Abu Dhabi’s Aldar Investment Properties raised USD 500 mn through its debut 10-year inaugural green sukuk this week. Saudi Electricity Co raised USD 2 bn through a dual-tranche USD-denominated green and conventional sukuk in April, and Saudi Arabia’s Al Rajhi Bank also raised USD 1 bn from its five-year USD-denominated sustainable sukuk issuance the same week. Bahrain made its debut green sukuk issuance in 1H 2022, raising USD 900 mn for Infracorp.

But the IsDB still reigns in regional green sukuk issuances: Saudi Arabia-based Islamic Development Bank (IsDB) has issued a total of USD 5.1 bn between 2017 and the first half of 2022 in green and sustainable sukuks, according to a report (pdf) prepared by the London Stock Exchange. While green sukuks are issued to specifically fund projects that have a positive environmental impact, proceeds from sustainability sukuks are applied to a combination of green and social projects.