Sobha Realty has successfully issued its first Green Sukuk, raising $750 million under its $1.5 billion Trust Certificate Issuance Programme.
The five-year sukuk, maturing in 2030, marks the largest green sukuk by a real estate developer globally this year. It will be listed on both the London Stock Exchange and Nasdaq Dubai.
Strong investor demand
The order book for the sukuk was oversubscribed by nearly three times, reaching about $2.1 billion. Investors from the Middle East accounted for 56% of the allocation, with international investors making up the remaining 44%. This strong demand allowed Sobha Realty to tighten pricing by 50 basis points from initial guidance, resulting in a profit rate of 7.125% per annum and an effective yield of 7.375%.
Use of proceeds and sustainability
Funds raised through the sukuk will finance or refinance eligible green projects as outlined in Sobha Realty’s Green Financing Framework. This framework follows international standards including the ICMA Green Bond Principles and the LMA Green Loan Principles. It received an independent Second Party Opinion from DNV, confirming its adherence to best market practices.
Ravi Menon, Chairman of Sobha Group, said: “The resounding success of our inaugural Green Sukuk issuance is a powerful testament to the market’s recognition of Sobha Realty’s robust financial standing and our deep, unwavering commitment to sustainable development. This transaction is not just a financing initiative; it is a strategic alignment of our capital structure with our core values.
“It enables us to accelerate our ambitious ESG agenda, funding projects that will deliver tangible environmental benefits and solidify our position as a leader in crafting sustainable luxury communities. This milestone reinforces our dedication to creating long-term value for all our stakeholders while contributing positively to the UAE’s Net Zero by 2050 Strategic Initiative.”
The sukuk is expected to receive a Ba2 (Stable) rating from Moody’s and BB (Stable) from S&P, consistent with Sobha’s corporate credit rating. Key banks including Dubai Islamic Bank, Emirates NBD Capital, J.P. Morgan, Mashreqbank, and Standard Chartered acted as Joint Global Coordinators. Legal counsel was provided by Clifford Chance and Dentons, with Grant Thornton serving as auditor.
tanvir@dubainewsweek.com
