UAE’s SCA Reports $19.55 Billion Islamic Sukuk on Abu Dhabi Market

The Securities and Commodities Authority (SCA) of the United Arab Emirates (UAE) has recently approved the listing of a significant range of bonds and Islamic sukuk on the Abu Dhabi Securities Exchange (ADX). This monumental approval, amounting to a total value of AED72 billion (approximately $19.55 billion), marks an important step in the UAE’s growing influence in the global sukuk market and highlights its continued commitment to sustainable finance and economic diversification.

These listings are part of the “Secondary Listing Market” for 2023 and reflect the UAE’s strategic vision of promoting financial innovation, green finance, and the growth of Shariah-compliant investment products.

UAE’s SCA Listings

According to recent data released by the UAE’s SCA, the approved listings cover 16 tranches in total, with a careful balance between 10 conventional bond tranches and 6 sustainability-focused green bonds and Islamic sukuk tranches. This approach aligns with the UAE’s strategic goals to develop its financial markets and support its economic and environmental sustainability agenda.

Conventional Bond Tranches

Within the conventional tranche, the UAE government’s significant role is highlighted by three major issuances worth $9.5 billion. These are split as follows:

• $2.5 billion for the first tranche
• $4 billion for the second tranche
• $3 billion for the third tranche

These government bonds emphasize Abu Dhabi’s financial strength and its proactive measures to attract global investments, both conventional and Islamic. The successful issuance of these bonds underscores the confidence investors have in Abu Dhabi’s financial policies, its AAA credit rating, and its solid economic standing.

Beyond the government, prominent UAE-based corporate entities have also been instrumental in this listing. One key player is Abu Dhabi National Energy Company (TAQA), which issued a $500 million tranche. TAQA, a state-backed company, is not only a key utility in the UAE but also one of the most prominent energy players in the Middle East and North Africa. By issuing this bond, TAQA aims to boost its energy infrastructure projects and support the country’s broader vision of economic development and diversification away from hydrocarbons.

Another significant contributor is Mamoura Diversified Global Holding, an investment vehicle aligned with Abu Dhabi’s strategic development. Mamoura issued six tranches, which together form a substantial part of the listings:

• $500 million
• $1 billion
• $1 billion
• $1 billion
• $500 million
• $750 million

Mamoura’s varied and sizeable issuances reflect its strategy to raise funds for diverse investment opportunities across sectors. This not only bolsters the UAE’s financial market presence but also provides multiple avenues for investors seeking stable, long-term investments.

Sustainability Takes the Stage

In line with global sustainability trends, the UAE’s SCA approved 6 tranches of sustainability-focused green bonds and Islamic sukuk, amounting to $4.8 billion (AED17.6 billion). These listings support the nation’s objective to become a global hub for green finance and sustainable investments. With these tranches, the UAE underscores its commitment to fostering an economy that aligns with the United Nations Sustainable Development Goals (SDGs) and prioritizes environmentally responsible growth.

Some key issuances in this segment include:

• Abu Dhabi National Energy Company (TAQA): Continuing its significant contributions to the bond market, TAQA issued a $1 billion green bond. As part of its corporate sustainability strategy, TAQA is channeling funds to renewable energy and water desalination projects, emphasizing cleaner, sustainable energy production and efficient resource use.
• First Abu Dhabi Bank (FAB): The UAE’s largest bank, FAB, issued a $1.3 billion tranche dedicated to sustainability. As a financial institution, FAB plays a pivotal role in driving sustainable financing practices and supporting the UAE’s transition to a greener economy through its Green Bond Framework.
• Abu Dhabi Future Energy Company (Masdar): A global leader in renewable energy and clean technology, Masdar issued a $750 million green bond. This move aligns with Masdar’s ongoing work in sustainable development and renewable energy projects, reflecting the company’s commitment to tackling climate change.
• Aldar Properties PJSC: As a major real estate developer in the UAE, Aldar issued a $500 million green bond, channeling investments toward sustainable real estate development. With projects adhering to environmental standards and sustainable building practices, Aldar plays an influential role in promoting responsible construction and urban development.
• Al Mamoura Diversified Global Holding: Adding to its conventional bond listings, Mamoura also contributed a $750 million green bond tranche to further support sustainability-driven projects.
• Abu Dhabi Islamic Bank (ADIB): A key player in Islamic finance, ADIB issued a $500 million sukuk focused on sustainability. As a Shariah-compliant institution, ADIB is committed to ESG (Environmental, Social, and Governance) principles, offering investors an opportunity to support ethical and sustainable investments.

The introduction of these green bonds and sukuk into the UAE’s financial market showcases the increasing demand for financial instruments that adhere to sustainability standards, while also being Shariah-compliant. This convergence aligns with the global shift toward ethical and responsible investing, where environmental and social governance factors play a critical role in financial decisions.

Sustainability and Sukuk

The rise of green sukuk in the UAE reflects the convergence of Islamic finance and sustainable investment, offering investors a means to support environmentally friendly projects while adhering to Shariah principles. With the increasing demand for sustainable financial instruments, green sukuk offers a unique blend of ethical investing and environmental responsibility, which offers a diverse range of investors looking for both returns and positive societal impact.

The UAE’s initiatives in promoting green sukuk listings align with its National Green Agenda 2030, which aims to position the country as a global leader in sustainable finance. The focus on green bonds and sukuk also aligns with international sustainability frameworks, providing an avenue for investors seeking to invest in projects that support the UAE’s vision for a cleaner, diversified economy.

Abu Dhabi Securities Exchange

The ADX, the platform where these listings are being traded, has evolved into a robust and dynamic market attracting a wide array of investors. The listings approved by the UAE’s SCA enhance the ADX’s standing as a prominent regional financial hub with global reach, offering diverse opportunities across conventional and Islamic financial instruments.

The ADX has been experiencing notable growth in recent years. According to official reports, its market capitalization has surpassed AED 2.8 trillion ($764 billion), driven by government-backed initiatives and increasing investor participation. The increased activity in sukuk and green bond listings further solidifies ADX’s strategic positioning and commitment to fostering a transparent, sustainable, and investor-friendly marketplace.

Why Sukuk and Green Bonds Matter?

For investors, sukuk and green bonds offer diversification opportunities and are considered stable, long-term investments. Sukuk, in particular, offers an attractive alternative to conventional bonds for investors who seek Shariah-compliant products that align with Islamic principles prohibiting interest-based earnings. With a global Islamic finance market valued at over $2.5 trillion, the demand for sukuk has been on the rise, and the UAE’s offerings stand as attractive options for regional and international investors.

Green bonds, on the other hand, have gained traction as ethical investments that support sustainable development goals. As climate change and environmental responsibility become increasingly prioritized by governments and corporations worldwide, green bonds provide an opportunity for investors to contribute to environmental and social causes while still realizing financial gains.

The UAE’s approval of such a diverse array of sukuk and bond listings represents an important step in advancing its economic diversification agenda. It reflects the country’s growing leadership in Islamic finance and sustainability, offering a blueprint for the integration of ethical, Shariah-compliant, and environmentally responsible investment products.

UAE as a Hub for Sustainable Finance

The UAE’s SCA approval of these sukuk and bond listings reflects the broader trend toward sustainable finance and economic diversification within the country. The focus on green bonds and sukuk not only supports the UAE’s ambitious climate goals and sustainability initiatives but also showcases the country’s potential to lead in the global Islamic finance market.

As the world continues to move towards sustainable development and ethical finance, the UAE is well-positioned to emerge as a central player in both Islamic and green finance. The significant listings approved by the SCA are a testament to the UAE’s ongoing efforts to diversify its economy, promote sustainable investments, and reinforce its status as a global financial leader.

By fostering a market that accommodates both conventional bonds and sustainability-focused green sukuk, the UAE paves the way for diversified growth, ensuring that its financial markets remain attractive, competitive, and aligned with global trends.