OPEC Fund’s debut SDG bond raises $1bn

Multilateral development finance institution, the OPEC Fund for International Development (OFID), priced its inaugural benchmark bond issue in the capital markets on Wednesday, January 18.

The bond was priced using its Sustainable Development Goal (SDG) bond framework on which Credit Agricole CIB acted as the sole sustainability advisor.

Attracting strong demand from investors globally, the three-year fixed-rate sustainability bond raised $1bn, which will be used to finance or refinance key sustainable development projects that are aligned with the OPEC Fund’s multi-sectoral development mission and directly contribute to achieving the SDGs.

Strong demand

The bond attracted 52 per cent of investors from Europe, Middle East and Africa (EMEA), 27 per cent from Asia-Pacific (APAC) and 21 per cent from North America.

Central banks and official institutions accounted for 62 per cent, banks 19 per cent, asset managers 9 per cent and insurance/pension funds for 8 per cent.

#OPECFund debut #SDG bond ➡️ the US$1 billion funds will be used to finance key sustainable development projects that will directly contribute to achieving the #SDGs. ? ? #GlobalGoals
? https://t.co/eeM9Q1swgU pic.twitter.com/AYd98q9LAz

— The OPEC Fund for International Development (@TheOPECFund) January 20, 2023

Dr Abdulhamid Alkhalifa, OFID  director-general, said, “The robust demand for our inaugural benchmark is a testament to the confidence that investors have in the OPEC Fund and our long-standing development-focused mandate.

“It also confirms the appetite for sustainable investments globally. At a time when there is an increasing need for development finance, the OPEC Fund is proud to have achieved this milestone. It will allow us to mobilise additional funds in support of our partner countries. The OPEC Fund has a 47-year track record in delivering successful development outcomes and the additional funds will enable us to further deepen our impact.”

Proceeds to support food security, healthcare

The OPEC Fund, which is headquartered in Vienna, is financing development projects in low- and middle-income countries in line with its South-South cooperation mandate. The bond proceeds will be allocated according to the specific criteria defined in the SDG Bond Framework focusing on food security, healthcare, infrastructure, education, employment, and renewable energy.

The framework is aligned with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, and Social Bond Principles 2021 published by the International Capital Market Association (ICMA).

Tanguy Claquin, global head of Sustainability of Crédit Agricole CIB said: “The success of this landmark issuance reflects both the credit strength of the OPEC Fund and its commitment to sustainable development. It also marks an outstanding first public benchmark transaction. This is a major step towards establishing the OPEC Fund’s long-term presence in international capital markets and the creation of a diversified funding programme that is capable of supporting the Fund’s global development mandate. This transaction also highlights the OPEC Fund’s meaningful contribution to the SDGs.”

In December, OFID approved more than $500m in new financing during a meeting of its governing board. The 15 new projects approved reflected OPEC Fund’s launch of a $1bn food security action plan and the adoption of its first dedicated climate action plan earlier last year.

Read: OPEC Fund approves over $500m in new global development support