Saudi developer clinches $3.7bn green loan for The Red Sea Project
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Saudi developer clinches $3.7bn green loan for The Red Sea Project

Saudi developer clinches $3.7bn green loan for The Red Sea Project

The financing is the first riyal-denominated credit facility to receive green financing accreditation

The Red Sea Development Company (TRSDC), Saudi-based developer has closed a SAR14.12bn ($3.76bn) term loan facility and revolving credit facility with four Saudi banks, it announced today.

The financing is the first riyal-denominated credit facility to receive green financing accreditation. Banque Saudi Fransi, Riyad Bank, Saudi British Bank and Saudi National Bank acted as mandated lead arrangers, while HSBC served as green loan coordinator on the transaction.

Green Financing accreditation was awarded due to TRSDC’s approach to social and environmental sustainability and the Red Sea Project’s international recognition as a green project, a statement said.

The Red Sea Project is set to welcome its first guests by the end of 2022, when the international airport and the first hotels will open. Phase one, which includes 16 hotels in total, will complete in 2023, the statement added.

Upon completion in 2030, The Red Sea Project will comprise 50 resorts, offering up to 8,000 hotel rooms and more than 1,000 residential properties across 22 islands and six inland sites. The destination will also include luxury marinas, golf courses, entertainment and leisure facilities.

“By applying a unique approach to design, utilising more sustainable methods of construction and using groundbreaking technology, we are not only reducing our impact on the environment but helping to deliver on our commitment to achieve a 30 per cent net conservation benefit by 2040. It is this pioneering approach that has helped us secure the first ever Riyal-denominated Green Finance credit facility,” said John Pagano, CEO of TRSDC.

The Green Financing accreditation is governed by a Green Financing Framework aligned with the Green Bond Principles (2018) and Green Loan Principles (2020) set out by the International Capital Markets Association (ICMA) and the Loan Market Association’s (LMA) respectively.

The framework enables TRSDC to issue green loans and other green financial instruments and allows TRSDC to identify, select, manage and report on eligible projects and assets in line with principles.

“We aim to lead the international luxury tourism industry’s transformation into a more sustainable model, including environmental and social sustainability. This Green Finance classification is the latest proof that we are setting new standards in ecotourism and showing the industry that things can be done in a different way both here in the kingdom, and globally,” added Pagano.

Opening to tourism is one of the ways Saudi Arabia intends to diversify the economy away from oil. Its other ambitious projects include an entertainment hub near the capital, and a new city in the north-west called Neom that’s expected to cost $500bn to build.

Owned by the kingdom’s sovereign wealth fund, the Red Sea Development will oversee a luxury tourism zone equivalent in size to Belgium. When the entire project is completed in 2030, it will target 1 million visitors a year, split evenly between domestic and international tourists.

With inputs from Bloomberg

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