01 | THE HIGHLIGHTS – THE INAUGURAL OPEC FUND BOND
THE INAUGURAL OPEC FUND BOND
Several years of painstaking preparation came to fruition when the OPEC Fund for International Development issued its inaugural benchmark bond at the beginning of 2023. The 3-year fixed-rate bond raised US$1 billion in new funds, which are financing or refinancing key sustaina- ble development projects in line with the OPEC Fund’s mission and contributing to the Sustainable Develop- ment Goals (SDGs). The bond with a 4.5 percent coupon attracted strong interest from investors globally with over 40 investors in the book and was almost 1.5 times oversubscribed. Investor interest was highest in Europe, Middle East and Africa with 52 percent, followed by Asia & the Pacific with 27 percent and North America with 21 percent. While central banks and official institutions accounted for 62 percent of investors, banks came second with 19 percent, followed by asset managers with 9 percent and insurance/pension funds with 8 percent. Since its establishment in 1976, the OPEC Fund has been entirely equity funded. The plan to enter the capital markets to diversify its funding base is a central facet of the OPEC Fund 2030 Strategic Framework, which aims to expand the institution’s operations and deepen its impact in response to growing demand for its support. The benchmark was issued as a sustainability bond using the OPEC Fund’s SDG Bond Framework, which complies with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021 and Social Bond Principles 2021 pub- lished by the International Capital Market Association. The proceeds will be used to finance and refinance eligi- ble projects in partner countries in OPEC Fund priority
areas such as food security, healthcare, infrastructure, education, employment and renewable energy.
The successful bond issuance establishes access to global capital markets and allows the OPEC Fund to enhance its support to partner countries.
Our progress has not gone unnoticed by the internation- al credit rating agencies: in December, S&P Global Rat- ings assigned the OPEC Fund’s long-term issuer credit rating an upgrade from AA to AA+ (outlook stable). In July, Fitch Ratings affirmed the OPEC Fund’s long-term rating of AA+, outlook stable. With its inaugural bond issuance, the OPEC Fund joined fellow multilateral development banks in the capital markets. To meet the sharp rise in demand for develop- ment financing driven by the impacts of rising interest rates amid heightened needs around the globe, the OPEC Fund has tapped new sustainable and prudent sources of funding. Underlining its commitment to investors, the OPEC Fund listed its bond on the Main Market of the London Stock Exchange. The bond was simultaneously dis- played on the Sustainable Bond Market. The Main Market is world-leading in the admission and trading of equity, debt and other securities and represents a badge of quality for every company admitted to trading. It is home to more than 1,000 firms from 100 countries, including many of the world’s largest, most successful and dynamic companies. The US$1 billion bond is part of a wider borrowing pro- gram of up to US$3.5 billion in long-term debt between 2023 and 2025. The OPEC Fund is constantly monitor- ing market developments and is ready to act swiftly when new opportunities arise.
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