Saudi Arabia has made a pioneering move in sustainable finance by issuing the first-ever euro-denominated green bond by a sovereign in the MENA region. The €1.5 billion ($1.6 billion) bond, coordinated by J.P. Morgan, signals the Kingdom’s growing commitment to environmental sustainability and economic diversification under its Vision 2030 plan.
“This deal highlights our commitment to our clients and our specific expertise in helping sovereign issuers navigate the complex and rapidly evolving sustainable finance debt capital markets,” said Aditya George, Head of Sustainable Finance for CEEMEA DCM at J.P. Morgan.
Strong Investor Demand
The bond offering, which targets a range of projects under Saudi Arabia’s Green Financing Framework, including energy-efficient technologies, reforestation initiatives (such as planting 10 billion trees), and expanding public transport, saw an overwhelming response from investors. The issuance was oversubscribed more than four times, with €7.2 billion in bids received, signaling robust investor appetite for green, sustainable investments.
“Demand for sustainability-themed securities, particularly green-labeled, remains robust in the European market,” commented Paul O’Connor, Head of EMEA Sustainable Finance at J.P. Morgan. “That partly drove the decision to issue in euros: targeting Eurozone investors.”
Strategic Partnership and Pricing Success
The green bond was priced with a competitive edge, with the seven-year green tranche tightening by 40 basis points, closing 115 basis points above its benchmark. Alongside the green bond, a conventional bond offering of $820 million was also issued, priced at 145 basis points over mid-swaps.
J.P. Morgan’s leadership in this transaction underscores the strength of its long-standing relationship with Saudi Arabia. The firm played a key role in advising the Kingdom’s National Debt Management Center on building its sustainable financing framework and engaging investors before the issuance.
Saudi Arabia’s Green Ambitions
Proceeds from the green bond will be allocated to funding projects aligned with Saudi Arabia’s broader environmental and sustainability objectives, including the ambitious tree planting initiative and infrastructure development. This marks a significant step forward in the Kingdom’s goal to reduce its carbon footprint and enhance sustainable growth under Vision 2030.
The success of this bond issuance positions Saudi Arabia as a leader in sustainable finance within the MENA region, while also highlighting the growing importance of Environmental, Social, and Governance (ESG) factors in sovereign financing.
