DP World: The First Blue Bond in MENA
In a pioneering move within the Middle East and North Africa (MENA), Dubai-based logistics giant DP World has made waves with its inaugural release of a blue bond.
This financial instrument is designed to raise a substantial US$100m.
The funds will be exclusively used to support sustainable ventures across the regional maritime and water industries.
This bond, with a five-year maturity and a 5.25% coupon rate, marks a concrete step towards tackling environmental challenges and advancing corporate accountability within MENA.
Understanding blue bonds
Bonds, in the realm of finance, are essentially capital loans which are provided by investors to entities in need, to be repaid with interest over time.
Blue bonds, however, are a newer financial innovation emerging from the broader climate finance sphere, aimed specifically at fostering projects that enhance ocean health and water resource management.
These bonds expand upon the ethos of green bonds, which have broader environmental purposes like those employed by Spain's Iberdrola for renewable projects.
At present, the global focus on oceanic health is intensifying, propelled by evident damages from pollution and unsustainable practices.
Blue bonds, by directing investments into marine conservation and pollution reduction, offer a potent response to these escalating ecological concerns.
DP World’s oceanic commitments
DP World's blue bond is a key component of its Ocean Strategy, which intertwines global trade with the preservation of marine environments, thereby supporting the Sustainable Blue Economy.
“As a responsible leader in global trade, we are committed to preserving the ocean’s ability to provide for future generations,” says Sultan Ahmed bin Sulayem, Group Chairman and CEO of DP World.
“This blue bond will lay the foundation for the years to come, enabling us to remove barriers to comprehensive climate and ocean action.”
The influx of funds from this blue bond issuance is anticipated to bolster a range of initiatives, from enhancing sustainable marine transport to mitigating marine pollution.
Plans for 2025 include the development of alternative marine fuels to cut carbon emissions, infrastructural improvements at ports for reduced ecological impacts and the execution of nature-based solutions for ecosystem restoration.
These initiatives are aligned with the United Nations’ Sustainable Development Goals, specifically SDG 14, Life Below Water and SDG 6, Clean Water and Sanitation.
The investment management company T. Rowe Price Associates, Inc. played a significant role as one of the key investors.
“This innovative transaction will mobilise capital towards UN SDG 14 while providing an opportunity for attractive investment returns,” says Rob Sharps, the firm’s Chairman, CEO, and President.
“We hope this can serve as a model for other issuers and investors to support the blue economy,” says Rob Sharps, the firm’s Chairman, CEO and President.
Additionally, the issuance adheres to DP World’s enhanced Sustainable Finance Framework, which is in line with leading international guidelines such as those from the International Finance Corporation for Blue Finance.
Philip Brown, Managing Director and Global Head of Sustainable Debt Capital Markets at Citigroup, is a strong supporter of DP World’s framework.
“Citi is proud to have supported DP World in arranging this important inaugural blue bond issuance,” he says.
“This landmark transaction sets a benchmark for the region.”
Enhancing MENA’s sustainability agenda
The sustainability trajectory in MENA is accelerating, driven by the urgent need to address climate impacts and a rising tide of investor interest in environmental, social and governance (ESG) criteria.
However, challenges such as marine pollution, water scarcity and coastal biodiversity loss remain significant.
The issuance of DP World’s blue bond reflects an increasing recognition of the imperative for focused, innovative financing solutions to close the funding gap for these critical environmental goals.
“We are increasingly working in regions where the ocean is being polluted, coastal biodiversity is being lost, and critical resources like water are becoming scarcer,” says Sultan Ahmed bin Sulayem.
“This issuance represents our ongoing commitment to sustainable business practices and demonstrates our ability to lead the logistics sector towards a resilient future.”
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