QNB’s venture into green bond, the first of its kind in the country’s banking landscape, endorses Doha’s commitment to ESG (environment social governance) principles and sustainable investments even during this difficult time, according to a top official of the Qatar Financial Center Authority (QFCA).
“The notion of sustainable development has gained momentum in our society,” QFCA chief executive Yousuf Mohamed al-Jaida in specific reference to QNB’s recent $600mn tranche in the form of senior unsecured notes, which was issued with a maturity of five years and listed on the London Stock Exchange under sustainable bond market segment.
The ESG-focused investment vehicle such as a green bond could place Qatar ahead of the curve, he said at a webinar "Qatar Spotlight: Accessing the Debt Capital Markets and ESG Outlook", organised by HSBC.
Not only it (QNB green bond) represents the second commercial bank in the Gulf region to venture into green market but also it “endorses Qatar’s commitment to ESG principles and sustainable investments.”
The proceeds from this green bond issuance will be used to finance and/or refinance assets in verified eligible green projects. QNB's current domestic green portfolio comprises green buildings, energy efficiency projects and sustainable water and waste water management.
In its Capital Market Report 2020, the QFC had said sustainable or ESG investment is burgeoning, with a market valued at $30.7tn in 2018 and expected to surge in years ahead.
The mandatory ESG reporting requirement for the listed companies in Qatar serves as a stepping stone towards this objective, it had said.
“The $31tn sustainable/ESG investment market presents Qatar with an opportunity to establish a niche market in the region,” the report said.
HSBC Qatar managing director and head of global banking Osama Ali said the move by QNB “is a step in the right direction”.
HSBC acted as a joint lead manager and book-runner for QNB's inaugural $600mn green bond offering, which came as part of Qatari lender's strategy to attract high quality real money accounts with and ESG focus
Al-Jaida had said Qatar has thus far made “great” strides in capital market development, which contributed in attracting global investors, especially considering that the country has witnessed regular local bond and sukuk issuances.
This has been evidenced by Qatar, which was the first country to tap into debt capital market (DCM), since the coronavirus pandemic and the collapse in oil price, with its $10bn issuance this April.
“The move has opened the doors for regional bond sales and we saw other Gulf Cooperation Council countries following Qatar’s lead,” he said.
The bond and sukuk issuance in Qatar reached $28bn in 2019, showing a compounded annual growth rate of 28% since 2015, according to al-Jaida.
The growth in 2019 was largely driven by conventional bonds, which made up 83% of total issuance, and particularly sovereign bonds, which included the successful issue of a $12bn international jumbo bond in March 2019.
Highlighting that Qatar is looking for growth in this turbulent times; Ali said “we are positioning ourselves for the next cycle of growth.”
He applauded Qatar’s timely and well-calibrated stimulus package in order to mitigate the risks emerging from Covid-19 without compromising buffers.
Highlighting that the pandemic curve has flattened, he said “the economic indicators are picking up and macro balances are expected to improve.”