NBK Launches $500 Million Green Bonds, Pioneering Sustainable Finance in Kuwait
First-ever ESG issuance out of Kuwait and the inaugural green issuance by a MENA bank in 2024YTD
3 min
The National Bank of Kuwait (NBK) has entered the green finance market by issuing its first $500 million green bonds under its Global Medium Term Note program. This marks the first green bond issuance by NBK and the first from Kuwait, signaling a significant move towards the bank’s goals of supporting sustainable finance.
These green bonds have a term of six years with an early call option after five years. They are notable for being issued in both Reg S and Rule 144A formats, which makes them particularly appealing as they provide U.S. investors with rare access to Kuwaiti securities.
The issuance drew strong interest globally, with an order book that reached $1.5 billion, indicating an oversubscription of more than three times. This high demand reflects strong confidence in NBK‘s financial health and its commitment to environmental goals.
The U.S. led the geographical distribution of investors with up 49% of the issuance, followed by Middle East investors at 26%, UK investors at 18%, European investors at 5%, and Asian investors contributing 2% of the coverage. Asset managers were the predominant investors, with 69%, followed by banks and private banks at 22%, while governments, insurance companies and pension funds made up 9% of the total investor base.
The success of the bond issue allowed NBK to achieve favorable pricing, with the bonds issued at a spread of 95 basis points over US Treasuries, translating into a yield of 5.522%. The notes were issued at a discount and had a final coupon of 5.500%, fixed with semi-annual coupon payments until their first call date, followed by a floating rate of SOFR + 116 bps paid quarterly thereafter.
The bonds, set to be listed on the Irish Stock Exchange (Euronext Dublin), have a fixed interest rate up to the first call date, after which they will switch to a floating rate. The Bank will allocate an amount equivalent to the net proceeds from the bonds exclusively to finance eligible green assets, in accordance with the Sustainable Financing Framework launched by NBK Group in 2022.
Citigroup, JPMorgan, along with HSBC and Standard Chartered acted as Global Coordinators on the issuance. Additionally, Citigroup, JPMorgan, HSBC, Standard Chartered, Goldman Sachs International, First Abu Dhabi Bank, Emirates NBD, and National Bank of Kuwait acted as joint lead managers.
In its broader sustainability efforts, NBK is guided by a strategy that includes a commitment to responsible banking and the goal of achieving net-zero emissions. The bank aims to build a $10 billion sustainable asset portfolio by 2030 and has set a target to reduce its operational emissions by 25% by 2025.
Furthermore, NBK is committed to integrating ESG standards into its business activities and decisions and has taken significant steps towards this commitment by joining the United Nations Global Compact (UNGC), the world’s largest sustainability initiative for responsible business practices.
Setting new benchmarks in environmental accountability and as part of its carbon neutrality commitment, NBK has recently joined the Partnership for Carbon Accounting Financials (PCAF) initiative. This landmark move positions the Bank as the trailblazer from Kuwait and among just six banks within the MENA region to enlist alongside global financial giants. By participating in this initiative, the Bank commits to meticulously tracking and identifying the greenhouse gas emissions linked to its lending and investment activities, underscoring its dedication to transparent and responsible financial practices.
In a notable achievement, and for the second consecutive year, the bank has recently received a score of “C” from CDP for its Climate Change and Forests 2023 Categories.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Employment grew for the 16th consecutive month as companies expanded.
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According to a recent PMI report, Qatar experienced its fastest non-energy sector growth in almost two years in June, driven by surges in both existing and new business activities.
The Purchasing Managers’ Index (PMI) headline figure for Qatar reached 55.9 in June, up from 53.6 in May, with anything above 50.0 indicating growth in business activity. Employment also grew for the 16th month in a row, and the country’s 12-month outlook remained robust.
The inflationary pressures were muted, with input prices rising only slightly since May, while prices charged for goods and services fell, according to the Qatar Financial Centre (QFC) report.
This headline figure marked the strongest improvement in business conditions in the non-energy private sector since July 2022 and was above the long-term trend.
The report noted that new incoming work expanded at the fastest rate in 13 months, with significant growth in manufacturing and construction and sharp growth in other sectors. Despite the rising demand for goods and services, companies managed to further reduce the volume of outstanding work in June.
Companies attributed positive forecasts to new branch openings, acquiring new customers, and marketing campaigns. Prices for goods and services fell for the sixth time in the past eight months as firms offered discounts to boost competitiveness and attract new customers.
Qatari financial services companies also recorded further strengthening in growth, with the Financial Services Business Activity and New Business Indexes reaching 13- and nine-month highs of 61.1 and 59.2, respectively. These levels were above the long-term trend since 2017.
Yousuf Mohamed Al-Jaida, QFC CEO, said the June PMI index was higher than in all pre-pandemic months except for October 2017, which was 56.3. “Growth has now accelerated five times in the first half of 2024 as the non-energy economy has rebounded from a moderation in the second half of 2023,” he said.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
