DUBAI: Saudi National Bank, the kingdom's largest lender that is 50.4% indirectly owned by the government, sold $750 million in debut "sustainable" sukuk on Wednesday after demand topped $3.2 billion, a bank document showed.

The five-year Islamic bonds launched at 85 basis points (bps) over US Treasuries (UST), tightened from initial price guidance of around 110 bps over UST, the document from one of the banks on the deal showed.

Bankers have said the Gulf is expected to issue more debt aimed at environmentally-friendly uses, catalysed by governments pushing plans to meet ballooning demand from investors focused on environmental, social and governance (ESG) considerations.

Proceeds from SNB's debt sale will be used for projects eligible under its Sustainable Finance Framework, such as funding renewable energy-generating facilities, including loans to develop such projects, as well as loans related to tree-planting.

HSBC was the sole ESG structuring agent on SNB's sukuk sale and was joined on the deal by Citi, Emirates NBD Capital, Goldman Sachs, Mizuho Securities and SNB Capital.

More supply of ESG-related debt is expected from the Gulf soon. Abu Dhabi solar energy firm Sweihan PV Power Company could begin a sale of amortising green bonds as soon as Thursday, a bank document showed on Wednesday, through which it aims to raise around $728 million.