OPEC Fund mobilizes US$1 billion for development finance with landmark debut SDG bond

January 20, 2023 adhigo

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN THE UNITED STATES OF AMERICA WHERE TO DO SO WOULD BE UNLAWFUL. THIS PUBLICATION DOES NOT CONSTITUTE OR FORM A PART OF ANY OFFER OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR ANY SECURITIES IN THE UNITED STATES OR IN ANY OTHER JURISDICTION.

VIENNA, Jan. 20, 2023 /PRNewswire/ — The OPEC Fund for International Development, a multilateral development finance institution headquartered in Vienna, Austria, priced its inaugural benchmark bond issue in the capital markets on Wednesday. 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.

The bond attracted very broad interest with 52 percent of investors coming from Europe, Middle East and Africa (EMEA), 27 percent from Asia-Pacific (APAC) and 21 percent from North America (NAM). In terms of investor type, central banks & official institutions accounted for 62 percent, banks 19 percent, asset managers 9 percent and insurance/pension funds for 8 percent.

Distribution by Geography

Distribution by Investor Type

OPEC Fund Director-General Dr. Abdulhamid Alkhalifa said today: “The robust demand for our inaugural benchmark is 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 mobilize 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.”

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. 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) and has received a positive opinion from the Second Party Opinion Provider Sustainalytics.

The success of the debut benchmark bond was supported by the OPEC Fund’s AA+ (Stable) rating from Fitch Ratings and AA (Positive) from S&P Global Ratings, which reflect the Fund’s prudent financial risk profile, excellent capitalization, conservative liquidity and risk management, preferred creditor treatment as well as diversified portfolio of purpose related assets.

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.”

OPEC Fund Head of Funding, Martine Mills said: “This 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 program and we look forward to continuing our engagement with investors going forward.”

The lead managers on the bond issue were Citi, Credit Agricole, Goldman Sachs, Nomura and TD Securities.

Ebba Wexler, Managing Director, Head of SSA DCM, Citi said: “This is a stand-out success for the OPEC Fund’s debut capital markets transaction. Pricing a US$1 billion debut transaction with over 40 investors in the book is an impressive achievement and the deserved result after an extensive global marketing exercise.”

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 Sustainable Development Goals.”

Lars Humble, Managing Director, Head of SSA, Goldman Sachs said: “This was a successful inaugural benchmark transaction for the OPEC Fund for International Development and we were thrilled to be involved. The issuer had done a lot of work with potential investors over the course of many months, and it was great to see such a well-diversified, high quality order book on the back of the thorough preparation. The deal size of $1 billion at a final pricing level 5 basis points inside of the tight end of initial price thoughts further highlights the strong confidence from investors in the name and the overall success of the transaction.”

Spencer Dove, Managing Director at Nomura, said: “The opportunity to bring a new credit to the market is incredibly rare, especially a supranational with such a track record in sustainable development. Today’s success reflects the significant work undertaken by the OPEC Fund team to meet the objectives set out in the Strategic Framework 2030 and transition to being a preeminent MDB in the capital markets. The quality and diversification of the order book is a clear signal of the work undertaken and positive engagement from the global fixed income community.”

Laura O’Connor, Managing Director, Origination and Syndication, TD Securities, Dublin, said: “This bond offering will serve as a liquid reference point from which the OPEC Fund can further build its presence in the US$ market. Given the scale of sustainable development financing required globally, debt market access for another multilateral development bank that can catalyse the flow of capital to impactful projects is an important milestone.”

About the OPEC Fund

The OPEC Fund for International Development (the OPEC Fund) is the only globally mandated development institution that provides financing from member countries to non-member countries exclusively. The organization works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world. The OPEC Fund was established in 1976 with a distinct purpose: to drive development, strengthen communities and empower people. Our work is people-centered, focusing on financing projects that meet essential needs, such as food, energy, infrastructure, employment (particularly relating to MSMEs), clean water and sanitation, healthcare and education. To date, the OPEC Fund has committed more than US$23 billion to development projects in over 125 countries with an estimated total project cost of US$190 billion. The OPEC Fund is rated AA+/Outlook Stable by Fitch and AA, Outlook Positive by S&P. Our vision is a world where sustainable development is a reality for all.

IMPORTANT NOTICE

The Securities to which this publication relates (the “Securities”) have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) and may not be offered or sold in the United States other than to persons reasonably believed to be Qualified Institutional Buyers (“QIBs”) as defined in Rule 144A under the Securities Act (“Rule 144A”) that are also Qualified Purchasers (“QPs”) as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940, as amended, in reliance on Rule 144A or another exemption from, or in a transaction not subject to, registration under the Securities Act. There will be no public offer of Securities in the United States.

Recipients of this publication who intend to purchase any Securities in the future are reminded that any such purchase or subscription must be made solely on the basis of the information contained in the Base Offering Memorandum dated 31 May 2022, as supplemented (together, the “Base Offering Memorandum”), the Pricing Supplement and the pricing notification prepared in connection with any such Securities.

In addition, in the United Kingdom, this publication is only being distributed to and directed at (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). In the United Kingdom, any investment or investment activity to which this communication relates will only be available to and will only be engaged in with relevant persons. Any person who is not a relevant person should not act or rely on this publication or any of its contents.

Manufacturer Target Market (MIFID II/UK MIFIR product governance) is eligible counterparties and professional clients only (all distribution channels). No EEA PRIIPs Key Information Document (KID) as not available to retail in EEA. No UK PRIIPs Key Information Document (KID) as the Issuer is exempt from the UK PRIIPs Regulation.

For the avoidance of doubt, neither the Issuer’s SDG Bond Framework nor the related second party opinion are incorporated into, nor do they form part of, the Base Offering Memorandum or any other materials referred to in this publication.

A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation.

Media Contact :

Basak Pamir

T+43151564174

[email protected]