$1.25bn Green Sukuk

The world’s most populous Islamic nation, Indonesia, has sold a sovereign green sukuk. The $1.25bn five-year sukuk is the world’s first sovereign green sukuk and was priced at a yield of 3.75 per cent. Standard & Poor’s upgrading of Indonesia to investment grade in 2017 was one of the factors which drove strong demand for the issuance to $1.25 billion as well as driving down the coupon from a previously touted 4.05%.

Money raised through green finance is assigned to green projects, such as renewable energy. Non-Sovereign Malaysian organisations have previously issued green sukuk, most recently with two issuances in 2017. Indonesia confirmed none of financing raised would go to fossil-fuel based infrastructure, or projects involving the burning of peat.

The South East Asian nation also raised US$1.75 billion via a 10-year sukuk sold at the same time as the green issuance. The non-green sukuk was sold at a coupon rate of 4.4%.

Growing Green Financing Market

Globally, $155.5 billion of green bonds were sold last year, according to the London-based Climate Bonds Initiative.

CIMB, Citigroup, Dubai Islamic Bank, HSBC and Abu Dhabi Islamic Bank helped arrange the deal.