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Friday, September 30, 2022

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MAF’s green Sukuk: GCC’s first corporate green Sukuk

The green Sukuk tsunami has reached GCC shores with UAE-based Majid Al Futtaim (MAF)’s latest green Sukuk offering. The paper, issued for US$600 million, is the world’s first benchmark corporate green Sukuk and the first green Sukuk issued by a corporate in the GCC region.

The issuance was structured under the Murabahah principle. With a 10-year tenor, the paper’s proceeds will be channeled to finance environmentally-friendly projects in areas such as renewable energy and sustainable water management. HSBC and Standard Chartered worked as the global coordinators, and were also the bookrunners with Abu Dhabi Islamic Bank, Dubai Islamic Bank, ENBD Capital, First Abu Dhabi Bank and Gulf International Bank. Listed on NASDAQ Dubai, the green instrument will mature on the 14th May 2029 and has a coupon rate of 4.64% payable semi-annually.

MAF commenced the marketing of the paper at about 245bps over midswaps. The deal attracted around US$3 billion in orderbook and the price was tightened to around 225–230bps over midswaps, and to a final spread of 220bps over the benchmark. Prior to the issuance of the paper, MAF in April established a Green Finance Framework and a Green Finance Steering Committee, which will oversee the selection of new and existing projects for the green portfolio. MAF also received a ‘low risk’ environmental, social and governance (ESG) rating by Sustainalytics, an independent ESG auditor, certifying the company is at low risk of experiencing financial impact from ESG factors, due to its low exposure and effective management of ESG issues.

“This issuance will enable MAF to deliver more sustainable experiences for our customers and to address the implications of climate change. As we progress on our sustainability journey, we are extremely proud to list the world’s first benchmark corporate green Sukuk and look forward to identifying and pioneering innovative ways to meet our ambition to be net positive by 2040. The widespread interest from global investors in the bond indicates their confidence in our ESG rating, ‘BBB’ credit rating and prudent financial and risk management approach. Investors’ faith in our vision empowers us to continue on our path to become one of the most environmentally sustainable companies within our industries,” MAF CEO Alain Bejjani said.

MAF, a shopping mall developer with businesses across the Middle East, Africa and Asia, is working on various initiatives in the green sector. The company has pledged to be net positive in carbon and water by 2040 across all of its operations, tenants and developments; and has also committed to a 37% reduction in operational carbon and water footprints by 2022. It is also looking to be net positive in carbon and water footprints for its own operations by 2030. These efforts make MAF the first company in the MENA region to commit to being carbon and water net positive.

MAF’s green Sukuk
US$600 million
May 2019
IssuerMAF Sukuk
ObligorMajid Al Futtaim
Size of issueUS$600 million
PurposeTo finance environmentally-friendly projects in areas such as renewable energy and sustainable water management
Tenor10 years
Issuance price100%
Profit rate4.64%
PaymentSemi-annually
CurrencyUS dollar
Maturity date14th May 2029
Global coordinatorsHSBC and Standard Chartered
BookrunnersHSBC, Standard Chartered, Abu Dhabi Islamic Bank, Dubai Islamic Bank, ENBD Capital, First Abu Dhabi Bank and Gulf International Bank
ListingNASDAQ Dubai
StructureMurabahah
Face value/minimum investmentUS$200,000 and integral multiples of US$1,000 in excess thereof

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