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
This agreement aims to foster the development of robust partnerships between the communities of both regions.
4 min
The Australian Chamber of Commerce and Industry has recently signed a Memorandum of Understanding (MoU) with the Dubai Chambers, marking a significant step towards enhancing cooperation and strengthening economic and trade relations between Dubai and Australia. This strategic agreement aims to foster the development of robust partnerships between the business communities in both regions.
In today’s interview, we will delve with Mr. Lyall Gorman, Vice President of the Australian Chamber of Commerce and Industry, into the objectives and anticipated impacts of this MoU, explore the key initiatives and projects that will arise from this collaboration, and discuss the potential challenges and strategies for overcoming them.
We will also look into how this agreement aligns with the broader strategic goals of the Australian Chamber of Commerce and Industry and the future of trade relations between Australia and the Middle East.
Can you give us a brief overview of the MoU signed with the Dubai Chamber? What are the main objectives?
The MoU we signed is designed for the two chambers to collaborate for mutual benefit and interest, focusing on business-to-business interactions. We are currently exploring opportunities around delegations, information sharing, trade, commerce, and e-commerce. The main goal is to bring businesses together in a structured manner to share ideas and encourage positive outcomes.
This partnership aims to increase the understanding of each other’s economies, recognize opportunities in each other’s regions, and work together to create mutual benefits. By doing that, we hope to enhance the economic ties between Dubai and Australia, leveraging each other’s strengths to create a more dynamic and prosperous business environment.
How do you see this MoU impacting trade relations between Australia and Dubai in the short and long term?
In the short term, we are expecting to generate a significant increase in awareness. By sharing information, data, and demographic insights, we will gain a better understanding of each other’s economic environments. This will help us identify existing opportunities for collaboration and potential mutual investment. From a trade perspective, we anticipate increased exports from Australia to Dubai and vice versa. This could include areas such as disruptive technology, medical research, education, construction, and agriculture—sectors that are currently emerging and critical.
In the long term, this enhanced understanding and collaboration will allow us to identify and capitalize on more opportunities. It’s about recognizing what’s happening in each other’s regions, understanding potential opportunities, and working together to create economic value. By fostering a deeper economic connection, we aim to create sustainable growth and mutual benefits over time.
What sectors or industries do you see as the primary beneficiaries of this partnership?
There are several mutual opportunities we aim to explore. Dubai has evolved incredibly over the last 20 years, achieving remarkable growth. However, there are still areas where further cooperation can drive growth. Some of the key initiatives will focus on sectors such as AI, digital disruptive technologies, smart technologies, financial services, education, construction, and advanced technologies.
Australia is highly regarded for its building codes and manufacturing capacity, especially in the construction sector. Additionally, I believe food security presents an interesting opportunity. As a major exporter of meat and other food products, Australia can contribute significantly to food security discussions, which is particularly relevant for Dubai.
Education is another area with significant potential for collaboration. By exploring these sectors, we aim to implement projects that not only address current challenges but also pave the way for sustainable development and innovative solutions in both regions.
What challenges do you foresee in the implementation of this MoU, and how do you plan to address them?
The cultural differences can impact how business is conducted, and this requires careful navigation. To address this, we need open and transparent communication, fostering a spirit of collaboration and mutual respect. It’s essential to have a genuine desire to embrace each other’s cultural differences and find common ground.
Another potential challenge is ensuring that both sides fully understand and adapt to each other’s regulatory environments and market dynamics. Dubai has matured significantly into a global business and corporate hub, which helps, but there are still differences to consider.
By prioritizing understanding and respect, and committing to ongoing learning from each other, we can effectively manage these challenges. Working together in a considerate and respectful manner will be crucial in overcoming any hurdles that may arise during the implementation of this MoU.
How does this MoU align with ACCI’s broader strategic goals for international trade and collaboration?
This MoU aligns closely with ACCI’s broader strategic goals by emphasizing the importance of fostering and diversifying economic partnerships on a global basis. The current global geopolitical situation has underscored the need for diversifying our supply chains and business relationships.
From an Australian perspective, the lessons learned during the COVID-19 pandemic and the evolving geopolitical environment have further highlighted the necessity of expanding our economic partnerships.
The Middle East, including the GCC, are regions where Australia already has strong relationships that can be further strengthened. Therefore, by working together, collaborating, and sharing knowledge and forward-thinking ideas, this MoU will help us identify and shape initiatives that add value and align with our strategic goals for international trade and collaboration.
How do you envision the future of trade relations between Australia and the Middle
I believe it will become stronger, more robust, and more regular, all for mutual benefit. There is a genuine willingness between both regions to grow and expand this relationship through a partnership model rather than a transactional one. This approach involves setting short, medium, and long-term goals, fostering a thriving and enduring relationship.
We have already established a strong partnership with Dubai Chambers and maintain a good relationship with the Dubai International Chamber here in Australia, led by Sophia Demetriades Toftdahl. This aligns with our strategic goal of global diversification in business.
Additionally, we recently signed an MoU with the Qatar Chamber and are about to sign with the Abu Dhabi Chamber as well.
Engaging with Saudi Arabia also makes sense, as it is a significantly emerging country. The last few years under new leadership have brought clarity to its economic, political, and social future and a strong passion and drive to become a major player in the region and global stage
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
