Bonds & Loans: Aussie issuer adds indigenous reconciliation plan to terms of SLB

A weekly overview of ESG developments for fixed income

An Australian government department has become the first issuer to commit to introducing a ‘reconciliation action plan’ for indigenous peoples as part of a sustainability-linked loan. The plan is one of the sustainability performance targets included in a A$300 (€184m) loan made to New South Wales Land Registry Services, with others including emissions reductions and diversity in senior management. Reconciliation action plans outline practical actions which a business can take to contribute to reconciliation with Aboriginal and Torres Strait Islander peoples, and have been implemented by 1,100 organisations across Australia. Commonwealth Bank and Westpac Banking Corporation acted as joint sustainability coordinators on the deal.

Investors and banks have recommended a 10- to 12-year maturity for the UK’s inaugural green gilt during consultation calls with the Debt Management Office (DMO) on Monday. According to the DMO, both groups generally favour a 2033 maturity for September debut, with a longer maturity of 20 to 30 years for the second deal, due to be issued in October. One bank told RI that the UK’s plans to report the social impacts of its green spending was “a concept that will be appreciated by investors” and would provide greater transparency.  

Chinese search engine and AI firm Baidu has raised $1bn from its inaugural USD green bond, to pay for the construction of green data centres and the design and production of electric ‘Robo Taxis’. The dual tranche offering – consisting of a 1.625%, $300m tranche maturing in 2027 and a 2.375%, $700m tranche maturing in 2031 – were five times oversubscribed, despite a 30% fall in Baidu shares since January, driven in part by concerns over regulatory risk for Chinese tech companies. 

The Bank for International Settlements Innovation Hub and Hong Kong Monetary Authority have joined forces to explore the possibility of ‘tokenising’ green bonds to allow retail investors to take part in the secondary market and to track the real-time environmental outputs of such bonds. “Our vision is that you can download an app to your phone, and invest any amount into safe government bonds, which will develop a green project,” said Bénédicte Nolens, head of the Innovation Hub’s Hong Kong centre.

Retirement village operator Summerset Group and ANZ have signed New Zealand’s biggest ever sustainability-linked loan. The NZ$700m (€414m) loan is linked to three targets: an emissions reduction target, the diversion of waste from landfill and continuation of dementia-friendly accreditation.

Packaging and insulation producer BEWI has raised €160m from a sustainability-linked bond. The five-year bond carries an interest rate of three month Euribor plus 3.15%, which is linked to the firm’s annual collection of polystyrene for recycling. It is targeting an increase to 45,000 tonnes by 2024 and 60,000 tonnes by 2026.

AIB has launched a social bond framework ahead of entering the market. The Irish bank has already raised €1.75bn from two green bonds, with eligible projects under the social bond framework including access to healthcare, finance for SMEs in deprived areas, and social housing. According to a second-party opinion issued by ISS ESG at the end of July, the framework is fully aligned with the Social Bond Principles.

Austrian bank Bawag has raised €500m from an eight-year green bond that was four times oversubscribed. Proceeds will finance mortgages for houses in the top 15% for energy efficiency, and loans to improve energy efficiency for existing buildings.

Deutsche Bank has raised $200m from its first green paper issued in Taiwan. The 34-year bonds, which pay a 0% coupon but have an IRR of 3.5%, were twice oversubscribed and will be listed on both the Taipei and Luxembourg stock exchanges. Proceeds will fund projects including renewables and green buildings.

Supermarket chain Coles has signed a A$1.4bn (€864m) sustainability-linked loan with a group of lenders, the largest ever for an Australian retailer. The four-year loan is linked to reductions in Scope 1 and 2 emissions, increases in waste diverted from landfill and percentage of women in leadership roles. ANZ, BNP Paribas and Rabobank acted as sustainability co-coordinators for the transaction.

Indian renewables developers have raised $3.6bn from green bonds in the first half of 2021, beating previous yearly records, according to a new report from the CEEW Centre for Energy Finance. Since 2014, eight renewables firms have raised $11bn from green bond issuance, with Greenko and ReNew Power accounting for 70% of the volume. Average oversubscription for the bonds is 3.6 times, with 50% of allocation to Asian investors.

Pfizer has raised $1bn from a 10-year sustainability bond. The 1.75% notes are intended to fund the research, development, manufacture and distribution of Covid vaccines. 

PNC has announced a $20bn green finance programme just a week after raising $700m from its inaugural social bond. The Pittsburgh-based bank aims to lend $20bn over the next five years to fund green buildings, renewables and clean transportation projects, as well as sustainability-linked bonds and loans tied to environmental targets.

The International Finance Corporation plans to release a second tranche of its sustainability-linked loan to Brazilian water and sanitation firm Corsan, according to reports in Latin Finance. The loan, agreed at the end of June, saw Corsan receive BRL300m (€49.2m), with a reduction in interest rate if it reduced its water losses in distribution to less than 35% by 2024.