Masdar raised another US$1bn of green financing in the bond market last week after its debut a year ago.

Otherwise known as the Abu Dhabi Future Energy Company (A2/-/AA-), the issuer’s green credentials were enough for some investors to overlook tight pricing on the two tranches. ”It’s a good issuer for green or climate-orientated funds, even though I am not overly excited about pricing,” an investor said.

The purpose of the state-owned utility is to develop and operate renewable energy projects. Around 96% of Masdar is indirectly owned by the government of Abu Dhabi, with Taqa holding a 43% stake, Mubadala 33% and Adnoc 24%

Leads on Thursday announced US$500m no-grow five-year and US$500m no-grow 10-year Reg S green bonds at IPTs of 130bp–135bp and 140bp–145bp versus Treasuries, respectively. The spreads were later fixed at 95bp and 115bp.

The shorter tranche got the greatest demand. The July 2029s brought in a book of around US$2bn while the July 2034s attracted around US$1.7bn of orders. That translated into a negative new issue concession of around 5bp on the shorter bonds, while bankers suggested a low single-digit premium was paid on the longer notes.

Fair value was not a straightforward calculation, and the numbers are open to interpretation. The trading level of Masdar’s existing bonds – US$750m 4.875% July 2033 greens – relative to Mubadala and Taqa should be taken into account, leads said.

“There’s a bit of dislocation between where the Masdar bond trades versus Mubadala and Taqa,” one bookrunner said. “You could argue that the pickup that Masdar offers to them is too big.”

The Masdar June 2033s were quoted on Thursday at a G-spread of 111bp, according to LSEG data. Mubadala’s US$1bn 4.375% November 2033s were at 90bp and Taqa’s US$1bn 4.696% April 2033s were at 77bp.

The investor said he was impressed by how quickly Masdar had allocated proceeds from its first green bond.

Masdar has allocated more than US$653m of the proceeds from its inaugural bond towards solar, wind and energy storage projects in Uzbekistan. Solar projects have also been funded in Azerbaijan and the UAE.

Abu Dhabi Commercial Bank, Citigroup, Credit Agricole, First Abu Dhabi Bank, HSBC, MUFG, Natixis and Standard Chartered led Masdar’s transaction.

Source: IFR