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Bonds & Loans: Enel issues world’s biggest sustainability-linked bond

A weekly overview of ESG developments for fixed income

Enel has issued the largest ever sustainability-linked bond, raising €3.25bn from a triple tranche deal – almost double the previous record. The utility, which claims to have been the first ever issuer of a sustainability-linked bond, raised €1bn in six-year notes, €1.25bn in nine-year notes and €1bn in 15-year notes. Demand reached €10.4bn. If Enel’s GHG emissions exceed certain limits by the end of 2023, the coupon on the six- and nine-year tranches will increase by 25 basis points, with an equivalent increase on the 15-year issue if Enel misses its 2030 target. 

Brazilian meat giant JBS has raised $1bn from a sustainability-linked bond, which reportedly saw high take up from dedicated ESG funds. The 2032 bond has a coupon of 3.625%, and is linked to a targeted 30% GHG emission reduction by 2030. Earlier this year, JBS’ subsidiary Pilgrim’s Pride secured similar funding for its operations in the US. In 2019, fellow Brazilian meatpacker Marfrig was accused of greenwashing by some in the ESG investment community when it issued a sustainability bond – many argued that businesses based on cattle farming are fundamentally incompatible with the transition to a sustainable economy.  

ING has found that greeniums for US dollar-denominated bonds are 4-5 basis points higher than for Euro-denominated issuances. The greenium for Euro bonds ranges from 1-3 basis points, while USD bonds experience savings between 5 and 8 basis points compared with their non-green counterparts. The report says that this is mostly due to a higher level of green issuance in Europe.

Icelandic Reykjavik Energy has issued a Íkr2bn (€13.5m) green bond with a yield of 4.6% to finance electric vehicle charging points and geothermal energy facilities.

ESG bond issuance in Asia has reached $69bn so far this year, according to Refinitiv data. China and South Korea accounted for the lion’s share of issuance, at 51.3% and 21.2% respectively. Green bonds made up 70% of issuance, followed by sustainability-linked bonds at 20%.

Australian engineering firm Worley has raised €500m through the first Australian sustainability-linked bond. Demand for the five-year deal hit more than €1.7bn, and it priced at 0.99%. This will increase by 25bps if Worley’s has not cut its Scope 1 and 2 emissions by 50% by 2025.

Raiffeisen Bank has issued a RON1.2bn (€240m) green bond, believed to be Romania's biggest ever corporate bond. The seven-year bond has a coupon of 3.793% – 0.8% above government securities with the same maturity. 

The French Community of Belgium – one of three federal communities in the country – has raised €500m in socially-labelled bonds. Demand was nearly three-times supply, and proceeds will be used to support access to essential services and affordable basic infrastructure.

Swedish medical technology firm Getinge has raised SEK570m (€56m) from a social bond. The three-year bond priced at 70 basis points over the three-month Stibor and will finance the expansion of life support equipment and drug contamination prevention products.

Horizons ETFs has launched Canada’s first exchange-traded fund for green bonds, based on the S&P Green Bond US Dollar index.

Singapore utilities group Sembcorp has issued an SGD400m (€248m) green bond for renewable energy. 90% of the 10-year bonds, which have a coupon of 2.45%, were placed with investors in Asia and the Pacific. 

British retailer Kingfisher has replaced its existing revolving credit facilities with a three-year £550m sustainability-linked version. The interest rate will be adjusted based on how many sustainability targets Kingfisher meets, based on its responsible business plan.

Packing and paper group Mondi has signed a five-year sustainability-linked revolving credit facility worth €750m. The interest rate will be adjusted according to the firm’s performance against a number of sustainability targets linked to its 2030 sustainability plan.