J.P. Morgan recently served as lead advisor and global coordinator on the first-ever euro-denominated green bond from a MENA sovereign.
The €1.5 billion ($1.6 billion) sale marks a significant step in Saudi Arabia’s plan to diversify its economy with sustainable investments, and showcases the firm’s expertise in sustainable finance.
Sustainability is a cornerstone of Saudi Arabia’s Vision 2030, its plan for economic and social reform. The Kingdom accessed the green bond market as a sign of its commitment to creating a better environment for future generations. It is also looking to diversify its economy in pursuit of economic resiliency.
The money raised from the bond — which drew more than EUR 7.2 billion in investor bids — will fund projects in line with Saudi Arabia’s Green Financing Framework, including energy efficient technology, the planting of 10 billion trees and public transportation.
“This deal highlights our commitment to our clients and our specific expertise in helping sovereign issuers navigate the complex and rapidly evolving sustainable finance debt capital markets.”
Aditya George
Head of Sustainable Finance for CEEMEA DCM, J.P. Morgan
A long-standing business relationship
J.P. Morgan was mandated due to its expertise in complex green products and strong ties to the country, which go back 90 years. These ties were further cemented after the firm served as global coordinator on Saudi Arabia’s first international debt issuance in 2016. Today, J.P. Morgan is the only U.S. financial institution with an onshore presence in the Kingdom that operates under two licenses. Its office in Riyadh, which is staffed by 137 employees, provides clients access to a comprehensive range of products and global banking capabilities.
“J.P. Morgan has a long-standing relationship with the Kingdom and has led a series of landmark bond deals raising more than $100 billion of bonds,” said Salman Alhammadi from J.P. Morgan’s CEEMEA DCM team, who worked on the deal.
Alhammadi said that J.P. Morgan’s ability to bring the Kingdom to the bond market reflects the holistic service the firm can provide to its clients by leveraging the full suite of its expertise and services. It began with advising the country’s National Debt Management Center as they developed a sustainable financing framework — a multi-year effort that saw bankers coordinating with multiple stakeholders.
From there, the firm arranged a series of discussions with sustainability-focused investors. This helped fuel appetite for the issuance before the Kingdom began the work of bringing the bond to market.
“This deal highlights our commitment to our clients and our specific expertise in helping sovereign issuers navigate the complex and rapidly evolving sustainable finance debt capital markets,” said Aditya George, head of Sustainable Finance for CEEMEA DCM at J.P. Morgan.
Robust demand for sustainability-themed securities
The market response to the bond was positive, with the issuance being “well oversubscribed,” according to Paul O’Connor, head of EMEA Sustainable Finance at J.P. Morgan. O’Connor said it helped that investors were looking for new sustainability leadership after the U.S. signaled a shift away from climate action following the 2024 election. But the team also leaned on traditional interests.
“Demand for sustainability-themed securities, particularly green-labeled, remains robust in the European market,” O’Connor said. “That partly drove the decision to issue in euros: targeting Eurozone investors.”
The green bond outperformed, with pricing for the seven-year green bond tightening 40 basis points and then closing at a spread 115 basis points above its benchmark. The issuance also included a $820 million 12-year conventional bond that priced 145 basis points over mid-swaps.
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