International Finance
Energy Featured

COP28 to accelerate revolution in sustainable bond market

IFM_COP28
Given that 51% of sustainable issuances in the Gulf region take the form of bonds, there is a strong expectation that they will benefit significantly from the heightened awareness being cultivated by COP28

The crucial role that COP28 will play in bringing attention to sustainability challenges in the area and guiding financial and investment requirements toward a more ecologically conscious course has been reinforced by Fitch Ratings.

Fitch Ratings Managing Director and Global Head of Islamic Finance, Bashar Al-Natoor, expressed hope that COP28 will hasten the issuance of sustainable bonds shortly.

“Given that 51% of sustainable issuances in the Gulf region take the form of bonds, there is a strong expectation that they will benefit significantly from the heightened awareness being cultivated by COP28,” the official stated further.

Al-Natoor emphasised in remarks to the Emirates News Agency (WAM) the notable rise of ESG (environmental, social, and governance) bonds in the United Arab Emirates, which is expected to reach USD 6.4 billion by the third quarter of 2023, up 41% from USD 4.5 billion in the previous quarter.

He emphasised that ESG bonds issued in the United Arab Emirates account for over 30% of all ESG bonds rated by Fitch Ratings and represent over 19% of the worldwide ESG bond market.

Al-Natoor went on to say, “The UAE emerged as the leading issuer of sustainable bonds globally during the third quarter of 2023, contributing USD 1.8 billion or approximately 80% of the global total, which stood at USD 2.3 billion.”

He emphasised how crucial the UAE is to the advancement of governmental programmes and sustainability measures, especially in 2023. He pointed out that the timeliness of these projects varies, with some producing rewards right now and others having long-term advantages.

Al-Natoor emphasised that the UAE’s Islamic finance is expected to benefit from COP28, pointing out that by the 2022 end, Islamic financing would have contributed about 29% of all funding for the banking industry. Institutions in the United Arab Emirates are acknowledged as prominent investors and issuers of Sukuk, or Islamic bonds, and they are instrumental in setting up Sukuk issuances.

All sustainable issuances evaluated by Fitch in the United Arab Emirates, he said, fall within the “investment grade” category. Of these, about 35% are related to financial institutions, 25% are companies and infrastructure projects, and 38% are other companies and sectors.

Al-Natoor made the following statement about green issuances: “Globally, green issuances constitute about 45% of the total ESG issuances during the third quarter of 2023.”

According to him, green Sukuk is a subset of ESG issuances that includes social, sustainable, blue (water-related), and green issuances.

He discussed the notable rise of the well-known ESG sukuk around the world, which increased by 66% a year to USD 33.3 billion in the last quarter of 2023. According to Fitch, Saudi Arabia has the largest percentage of established ESG sukuk issuances (48.1%), followed by the United Arab Emirates (30.5%), Indonesia (19.6%), and Turkey (1.8%).

What's New

M-Money: The payment gateway for financial inclusion

WebAdmin

The ‘Tijara’ route of empowering Bahraini SMEs

WebAdmin

Business Leader of the Week: Meet Jim Ratcliffe, British billionaire & part-owner of Manchester United

IFM Correspondent

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.