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The London Stock Exchange (LSE) has welcomed the Public Investment Fund’s (PIF) inaugural green bond, the first to be issued by a sovereign wealth fund on the international securities market.
It is also PIF’s first bond issuance, following a series of successful loan market transactions. The green bond listing, including a 100-year tranche, is the first to be issued by a sovereign wealth fund.
The $3 billion issuance, issued in 3 tranches to be repaid in 2027, 2032 and 2122, will be displayed on the London Stock Exchange’s Sustainable Bond Market, which was 8 times oversubscribed by investors.
“This inaugural green bond issuance is a historic milestone for PIF, marking the establishment of its international capital markets program - one of the PIF’s key objectives. It will also allow PIF to further diversify its sources of debt funding thereby helping to drive impactful investment in Saudi Arabia and internationally," said Fahad AlSaif, Head of PIF’s Global Capital Finance Division.
"The strong investor support for the issuance is a testament to PIF’s strong financial profile, world-class governance, exceptional green projects and the diversity of its business and portfolio. It also reflects PIF’s leading role in transforming Saudi Arabia’s economy and the broad range of green and sustainable investment opportunities that this transformation provides.”
The listing from Saudi Arabia’s sovereign wealth fund highlights PIF’s commitment to supporting the country’s sustainability agenda by diversifying its economy and reaching Net Zero emissions by 2060. The 100-year tranche in particular illustrates investors’ confidence in PIF’s long-term mission and its support of the green agenda.
The green bond meets the International Capital Market Association (ICMA) Green Bond Principles 2021, which set out requirements covering use of proceeds; project evaluation and selection, management of proceeds; and reporting. As part of PIF’s role in supporting Saudi Arabia’s green agenda, it has established a Green Finance Framework, which outlines the projects eligible for green financing in line with international standards.
The proceeds of the issuance will be allocated to finance or refinance eligible green projects including investment in sustainable water management, renewable energy, pollution control, green buildings, and clean transportation. ICMA’s criteria includes the requirement to report on use of proceeds on an annual basis.
Global green bond issuance reached $479 billion from over 1000 issues in 2021, a 96% growth rate compared with 2020 and a record high, according to data from Refinitiv. This was up from just $63 billion in 2016.
As part of the transaction, PIF utilised SparkLive Roadshow, the London Stock Exchange’s digital solution for delivering hosted roadshows for the capital markets community. This enabled extensive engagement with global investors to view investor presentations and supporting documentation through SparkLive. SparkLive offers a seamless virtual events and communications solution that is used for on-demand access to corporate earnings calls, AGMs and capital markets and investor roadshows.
Julia Hoggett, CEO, the London Stock Exchange plc, said: “We congratulate PIF on becoming the first sovereign wealth fund to list a green bond. Green bonds are critical tools that enable issuers to achieve key sustainability objectives and the issuance reflects PIF’s commitment to contribute to Saudi Arabia’s green agenda. Climate change is the most urgent challenge of our lifetimes and, as the world’s most international financial centre, the London Stock Exchange is at the forefront of enabling capital flows to help fund the just transition to net zero.”
Andrew Griffith, Financial Secretary to the Treasury, UK Government said:
‘’I am delighted that the Public Investment Fund have chosen to list their inaugural green bond in London. This is a sign of confidence in the UK as a global leader in sustainable finance. This launch of the first green bond by a sovereign wealth fund also highlights how the UK and its partners can work constructively on the sustainable finance agenda.”
LSEG is well placed at the heart of global capital markets to be a strategic enabler of sustainable economic growth. It plays an important role in accelerating the transition to net zero and supporting the growth of the green economy. From comprehensive sustainable investment data and analytics to multi asset indices for investors and access to international capital markets for green finance for a broad spectrum of issuers, LSEG provides solutions designed around the needs of the entire sustainable finance ecosystem.
A leading global hub for sustainable finance, the London Stock Exchange has supported investors and issuers in the transition to a low-carbon and sustainable economy for over a decade. Its Sustainable Bond Market (SBM) is home to more than 300 green, social, and sustainability bonds, raising a combined £120 billion. In equity markets, more than 100 issuers have been recognised by London Stock Exchange’s Green Economy Mark, which identifies London-listed companies and funds that derive more than 50% of their revenues from green products and services.
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