The Global Credit Rating Agency, Standard & Poor (S&P) said that Kuwait contributed to issuing $1 billion worth of sustainability bonds or green sukuk in the first 9 months of 2024. The agency stated that the total volume of sustainable sukuk issued in the Middle East amounted to $6.1 billion in the same period.
Throwing more light, the agency explained that green bonds and sukuk were issued in Kuwait, wherein the National Bank of Kuwait issued bonds worth $500 million in the second quarter of 2024; and the Warba Bank issued sukuk worth $500 million in the third quarter this year.
Standard & Poor indicated that sustainability bond issuances in the Middle East region have declined from their levels for the same period last year. To activate issuances, it may require accelerating the implementation of net-zero emissions policies, despite government initiatives and increasing alignment with sustainability strategies or even regulatory requirements.
Regarding the Middle East, the report mentioned that total sustainability bond issuance reached about $16.7 billion in the first nine months of 2024, which is down 18% compared to the same period last year.
This comes after the relatively strong momentum generated by the COP28 conference of the parties to the United Nations Framework Convention on Climate Change.
“Demand for sustainability bonds in the region is sensitive to economic growth, inflation and interest rates, while transparency and disclosure in environmental, social and corporate governance reports are in the early stages of development, and these factors may affect financing and regulations,” said Rawan Oueidat, credit analyst at the agency.
The UAE and Saudi Arabia are likely to continue to account for the bulk of sustainability bond issuance in the region, despite increased activity elsewhere. Sustainability bonds lead the issuance share, with more banks contributing to the issuances, with almost muted corporate activity.
Rawan Oueidat added that renewable energy remains a key priority in the region, with most issuances involving bonds linked to renewable energy projects as part of the use of the proceeds from the offering.
