Finance

OPEC Fund Debuts US$1bn SDG Bond For Development Finance

The OPEC Fund for International Development, a development institution established by the Organization of the Petroleum Exporting Countries’ member governments, has raised $1 billion by selling its first ever bond.

With the money earmarked for food security, healthcare, infrastructure, education, employment and renewable energy projects, the three-year bond which will pay investors an interest rate of 4.5 per cent, will also be classed as a ‘sustainable development’ bond.

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

Attracting strong demand from investors globally, the 3-year fixed-rate sustainability bond raised US$1 billion, 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.

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The OPEC Fund’s head of Funding, Martine Mills Jansen, said the bond pricing is a major milestone for the OPEC Fund and the culmination of several years of intensive work. “The success of our debut bond in the current market environment is a testament to the strength of our credit. We are pleased to join the community of multilateral development banks issuing in the capital markets. This is an important step in the establishment of our borrowing programme and we look forward to continuing our engagement with investors going forward,” Mills said. 

A breakdown of subscription showed that central banks from the Middle East, Europe and Asia and other types of “official” institutions, including from the United States, accounted for 62 per cent of the bond’s buyers.

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Commercial banks made up another 19 per cent, while asset managers and insurance and pension funds accounted for nine per cent and eight  per cent respectively.

On geographically spread overall, 52 per cent of the buyers were from the Europe, Middle East and Africa region, 27 per cent from Asia-Pacific and 21 per cent were from North America.

The OPEC Fund 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.

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OPEC Fund assistant director general, Financial Operations, Tarek Sherlala, added,“These increased financial resources will enable us to step up delivery in partner countries and help boost our development impact. The support of global investors will add to our credit strength and move us to a new phase in our delivery of impactful and sustainable development cooperation.”

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