Abu Dhabi Future Energy Company PJSC, better known as Masdar, today solidified its reputation as a sustainable finance pioneer by issuing US $1 billion in green bonds. This landmark transaction brings the total outstanding under Masdar’s Green Bond Programme to US $2.75 billion, underlining the company’s commitment to financing the global energy transition.

Issuance Structure and Terms

Masdar’s latest issuance was split evenly into two tranches of US $500 million each, with maturities of five and ten years. The five-year tranche carries a coupon of 4.875%, while the ten-year tranche is priced at 5.375%. Both tranches were met with robust demand, attracting a peak order book of US $6.6 billion more than six times the issuance size and securing allocations of 80 basis points over US Treasuries for the shorter tenor and 90 basis points for the longer tenor, marking the tightest spreads Masdar has achieved to date (Reuters).

• Issuance size: US $500 million (5-year) & US $500 million (10-year)
• Coupon: 4.875% (5-year), 5.375% (10-year)
• Spread: +80 bps (5-year), +90 bps (10-year)
• Order book: US $6.6 billion (peak)

International investors took up 85% of the bonds, with 15% allocated to the MENA region a split that highlights Masdar’s global investor reach and local market support (Reuters).

Investor Appetite and Market Context

The oversubscription underscores the growing appetite for green debt in the Gulf Cooperation Council (GCC) and beyond, even against a backdrop of broader market volatility. According to Reuters, Gulf issuers including Saudi Arabia’s Public Investment Fund and Abu Dhabi Ports have been undeterred by recent debt-market turbulence, with Masdar’s issuance standing out for its sustainable credentials (Reuters).

This issuance follows Masdar’s earlier green bonds of US $750 million in 2023 and US $1 billion in 2024, all of which were fully allocated to finance new “dark green” projects those with the highest environmental impact according to the Green Bond Principles (Reuters).

Strategic Use of Proceeds

All proceeds from Masdar’s green bonds are earmarked for “dark green” renewable energy projects, encompassing solar, wind, green hydrogen, and standalone battery storage. In its updated Green Finance Framework revised in March 2025 Masdar expanded eligibility to include green hydrogen and battery storage, reflecting the company’s strategic pivot to a wider decarbonization toolkit (Reuters).

The funds will support Masdar’s target of reaching 100 GW of renewable capacity by 2030, up from about 51 GW currently under development across 40 projects in 18 countries. This ambitious growth path is central to both Masdar’s corporate strategy and Abu Dhabi’s broader clean-energy objectives, including its role in hosting COP28 later this year.

Strengthening Financial Ratings

Credit rating agencies have recognized the solidity of Masdar’s funding strategy. The latest green bond issuance received an AA rating from Fitch and A1 from Moody’s, aligning with Masdar’s corporate credit ratings. In April, Moody’s reaffirmed its Sustainability Quality Score of SQS1 (Excellent) the highest possible for Masdar’s updated framework.

These ratings affirm investor confidence in Masdar’s long-term financial resilience and governance structures, essential for attracting capital at competitive rates in an environment of rising global interest rates.

Leadership Perspectives

Mohamed Jameel Al Ramahi, Masdar’s Chief Executive Officer, emphasized the importance of this issuance:

“This third green bond demonstrates the continued and growing confidence the investment community places in Masdar’s financial strength and long-term vision. The funds raised will be critical in achieving our portfolio capacity targets and supporting energy transformation in emerging markets, which often need investment the most.”

Mazin Khan, Chief Financial Officer, echoed this sentiment:

“Aligned with Masdar’s Green Finance Framework, this issuance underscores the overwhelming investor confidence in our financial resilience and strategic direction. We are raising sustainable finance on an industrial scale to develop new clean energy projects, offering investors a tangible way to support the green financing agenda.”

Complementary Financing Activities

Masdar’s green bond programme is part of a wider financing arsenal. In 2024 alone, the company executed US $6 billion of non-recourse project financing for over 11 GW of clean-energy capacity across 12 new projects in nine countries. These transactions structured without recourse to Masdar’s balance sheet demonstrate the firm’s ability to leverage structured finance solutions to accelerate project deployment.

Moreover, Masdar has recently made significant acquisitions to diversify its asset base:

• Terna Energy (Greece): In April 2025, Masdar completed the full acquisition of Greece’s Terna Energy for €2.4 billion equity, underscoring its commitment to European growth and cross-border expansion (Reuters).
• Solar and Wind Portfolios: Strategic co-investments with Iberdrola in the 476 MW Baltic Eagle offshore wind farm in Germany and a pipeline of solar projects in India and Africa illustrate Masdar’s diversified market approach (Reuters Plus).

Regional and Global Green Bond Trends

Globally, green bond issuance surpassed US $550 billion in 2024, up 20% from the previous year, driven by policy support and investor ESG mandates. In the Middle East and North Africa (MENA), green bond volumes hit US $15 billion in 2024, with Masdar alone accounting for over 20% of regional issuance. Sovereign issuers such as Egypt and Saudi Arabia have also tapped the market, alongside quasi-sovereigns like the Abu Dhabi National Oil Company (ADNOC) and state banks.

Despite intermittent market disruptions triggered by US tariff announcements and higher interest rates investors remain attracted to green bonds’ dual financial and sustainability returns. “There is appetite,” says Zeina Rizk, co-head of fixed income at Amwal Capital Partners, citing the successful $500 million sukuk by Mashreqbank as evidence of resilient demand (Reuters).

Broader Impact on UAE’s Energy Transition

Masdar’s financing activities are central to the UAE’s net-zero ambitions. With heavy investments in green hydrogen projects in Saudi Arabia and Australia, as well as the forthcoming launch of the world’s largest solar-plus-storage facility in Oman, Masdar is not just financing projects but also catalyzing regional industrial ecosystems.

The ripple effects include technology transfer, local job creation, and enhancement of domestic supply chains for solar panels, wind turbines, and electrolyzers. In line with the UAE’s Economic Vision 2030, these developments help diversify the economy away from hydrocarbons, boosting resilience against oil-price volatility.

Looking Ahead: Growth and Innovation

Masdar’s strategic pipeline includes:

1. Green Hydrogen Hubs: Collaboration with European utilities to build electrolysis plants powered by solar and wind.
2. Battery Storage Systems: Deploying standalone battery projects in emerging markets, leveraging the newly included eligibility in its Green Finance Framework.
3. Sustainable Aviation Fuel: Partnerships to commercialize SAF production, aligning with ICAO’s CORSIA targets.

Furthermore, Masdar is evaluating an Initial Public Offering (IPO) as part of its long-term growth and capital diversification strategy, potentially launching on a major exchange within the next two years (Reuters).

Conclusion

Masdar’s latest US $1 billion green bond issuance not only marks the tightest pricing in the company’s history but also reinforces its position at the vanguard of sustainable finance. By channeling all proceeds into high-impact renewable projects, Masdar offers investors both stable financial returns and measurable environmental benefits. As global capital markets increasingly embrace the energy transition, Masdar is poised to continue leading by example—demonstrating how public-sector backing, strong credit ratings, and a clear sustainability mandate can unlock institutional funding on an unprecedented scale.

With its diversified portfolio, strategic acquisitions, and innovative financing mechanisms, Masdar is charting a course toward a decarbonized future one green bond at a time.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

16th May, 2025