DP World issues $100m blue bond to fund sustainable marine transport projects

Eligible initiatives include research to reduce maritime sector pollution, sustainable port developments, marine conservation, tackling waste in coastal areas and improving water quality

A diver working on corals. DP World’s five-year blue bond was priced at a spread of 99.6 basis points above US Treasuries with a 5.25% coupon rate. Photo: DP World

DP World, one of the world's biggest port operators, has issued a $100 million blue bond aimed at funding sustainable projects in marine transport, port infrastructure, marine pollution and water quality initiatives as it taps into growing investor demand for eco-friendly finance deals.

The five-year blue bond was priced at a spread of 99.6 basis points above US Treasuries, with a 5.25 per cent coupon rate, making it DP World’s tightest spread in the bond or sukuk market, a statement on Thursday said.

“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, posing significant threats to both nature and people," said Sultan bin Sulayem, DP World's group chairman and chief executive.

"This issuance represents DP World’s second foray into the sustainable financing capital markets highlighting our commitment to sustainability and demonstrates our approach towards sustainable business practices.”

DP World has pledged to achieve net-zero carbon emissions by 2050 through electrification and renewable energy investment. Of the $1.5 billion it raised last year, $1.17 billion has already been allocated to eligible green projects, it said.

Last October, DP World raised the money in a green sukuk issuance to fund its global decarbonisation projects, seeking to align its financing strategy with its sustainability efforts.

Projects financed though the sukuk have contributed to avoiding more than 177 million kg of carbon dioxide emissions, saving 466,057 MJ of energy and generating 866,686 kWh of renewable energy, the company said.

Blue projects

A blue bond is a debt instrument that companies, governments and development agencies issue to raise finance for marine and ocean-based projects that have long-term sustainability objectives and benefits.

They work like conventional bonds whereby an investor lends capital to the bond issuer who pays back the initial investment plus an interest rate every year until the end of the bond’s term.

DP World's blue bond, for which investment management firm T. Rowe Price Group was the key investor, will be used to fund a variety of eligible marine sustainability projects.

These include supporting research, development and procurement of alternative fuels and technology to reduce carbon emissions, and other sources of marine pollution in the maritime sector.

It also covers funding infrastructure upgrades to minimise environmental impacts, noise and air pollution for sustainable port developments.

DP World, which operates ports around the world from Buenos Aires to Hong Kong, pledged in 2021 to become a carbon neutral enterprise by 2040.

The blue bond will also cover the conservation and restoration of marine ecosystems to improve biodiversity. It could also fund initiatives to tackle waste and pollution in coastal and marine environments, as well as improvements to water quality and making sure communities have equitable access to water.