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Bonds & Loans: Investors pile in on sustainability deal from Adani company

A weekly overview of ESG developments for fixed income

Investors got behind a sustainability-linked bond from Adani Electricity Mumbai at the end of last week, helping the firm raise $300m. Demand was nine-times higher than supply on the deal, largely from Asia. The 10-year bond has a coupon of 3.867%, which will be increased by 15 basis points each year if the issuer fails to increase its renewables share to 60% from its 2019 baseline of 3% by 2027. Adani will see an identical annual increase if it has not reduced its Scope 1 and 2 emissions by 60% by 2029. 

Sustainable bonds have accounted for 30% of Latin America’s nonfinancial cross-border corporate bond issuance in 2021, according to Fitch. Issuance so far this year totals $12.1bn – three times the 2020 total – with Brazil accounting for 52% of supply. 

Meanwhile, Indian firms have raised $4.64bn from sustainable bonds so far in 2021 – five times the amount raised in 2020. 10 Indian firms have issued this year and annual issuance could hit $10bn – half of all external commercial borrowing – Pramod Kumar, Barclays’ Managing Director and Head of Banking for India told Bloomberg Quint.

The World Bank has priced a C$600m (€409m) sustainable development bond. The five-year benchmark bond pays a semi-annual coupon of 1.2% per annum and will fund green and social projects for sustainable development in International Bank for Reconstruction and Development member states. 

ARA Asset Management has signed sustainability-linked loans for two of its real estate investment trusts (REITs). Prosperity REIT will receive HK$800m (€87m) from DBS Hong Kong, while Fortune Reit will receive HK$1.5bn (€159m) from the Oversea-Chinese Banking Corporation. The two five-year loans will have a reduced interest rate if the REITs meet a number of environmental targets including the installation of solar panels, reduced emissions and lower energy consumption.

Care home provider Anchor Hanover has raised £350m from its inaugural sustainability bond. The bond, which will finance 5,700 green care homes in the UK, was twice oversubscribed and has a coupon of 2%. 

Leeward Renewable Energy Operations has issued a $375m green bond. The eight-year notes have a coupon of 4.25% and will finance eligible wind, solar and renewables storage assets.

Real estate developer SIGNA Development Selection has raised €300m from its inaugural green bond, in a five-year deal offering a coupon of 5.5%. Proceeds will be spent on the construction of green buildings, energy efficiency projects and renewables.

Royalty Pharma has priced $600m of social notes, with a tenor of 10 years and a coupon of 2.15%. Eligible expenditures include funding innovation in the biopharmaceutical industry to treat fatal diseases, and financing areas underserved by research and treatment options.

Spanish shopping centre owner Lar España has issued a €400m green bond. The five-year bond was four times oversubscribed and has a fixed coupon of 1.75%. Lar España intends to use the proceeds to refinance real estate and make it greener. 

Benin has secured its lowest ever interest rate on Euro-denominated debt through the issuance of Africa’s first SDG bond. The €500m deal, which runs until 2035, priced at 511bp over mid-swaps on the back of strong investor demand – with demand doubling the amount of notes being offered. Proceeds will be partially spent on expanding access to drinkable water – just 70% of the population has access and Benin aims to expand this to 100% by 2026. 

Hungarian poultry firm Baromfi-Coop has raised HUF23.45bn (€65m) from a green bond to fund 13 green projects, including the installation of solar panels at 10 livestock plants, and the extension and upgrading of a feed mixing plant. The 10-year deal carries a 3% coupon. 

Royal Bank of Canada has raised $750m from its second green bond. A number of broker dealers owned and operated by underrepresented groups acted as joint lead managers for the five-year bond, which will primarily finance or refinance renewables, green buildings, sustainable land use and clean transportation.

Mexican real estate developer Finsa has signed a $135m sustainability-linked loan with BBVA. The five-year loan will finance the purchase of 12 buildings and two plots in the Oradel industrial park in Nuevo Laredo.