Bonds & Loans: Largest private credit-backed sustainability-linked loan signed

A weekly overview of ESG developments for fixed income

UK-based environmental and engineering business RSK Group has signed a £1bn sustainability-linked loan with alternative investment manager Ares Management, the largest yet in the private credit market. The firm estimates it will save £500,000 a year on interest rate reductions and said it will donate 50% of the savings to charity. Neither the KPIs nor the interest adjustment mechanism were disclosed, but Ares said they were “broadly focused on carbon intensity reduction and improvement to health and safety management and ethics”.

NRG Energy has raised $1.1bn from a sustainability-linked bond. The interest rate on the 11-year notes, which carry a coupon of 3.875%, will be increased by 25bp if NRG fails to meet its Scope 1, 2 and 3 emissions reduction target by 2026. Net proceeds from the bond will go towards the repurchase of existing debt including a $1bn 7.25% bond due 2026 and $355m of a $1.23bn 6.625% bond due 2027.

Swedish insurance group Länsförsäkringar now has 15% of its AUM in green, social and ‘thematic’ bonds, with its sustainable debt investments amounting to SEK19.5bn (€1.9bn), its Head of Responsible Investments Kristofer Dreiman has said. Länsförsäkringar said that the majority of the bonds in its portfolio were contributing to SDG 13, combating climate change; SDG 7, renewable energy; and SDG 11, sustainable cities and communities.

Canadian container ship operator Seaspan has raised $750m from a ‘blue transition’ bond. The eight-year issue was upsized from $500m following significant investor interest, and will pay a semi-annual coupon of 5.5%. Proceeds from the bond will be allocated to eligible projects under the firm’s blue transition framework, which is aligned with the green bond principles, including the construction of new container ships using alternative fuels, as well as retrofitting older ships to support lower carbon propulsion systems and vessel efficiency improvements.

Adani Green Energy is looking to raise $600m from overseas bonds to quicken the execution of its renewables projects, the Economic Times has reported.

US residential solar firm Sunnova Energy Corporation is looking to raise $350m from a private placement of five-year green bonds. Proceeds from the sale will be allocated to eligible projects under the firm’s green financing framework, which include fitting solar systems to new build homes and retrofitting solar and energy storage systems.

Argentinean power company Genneia has offered holders of its $500m 8.75% January 2022 bond and $53m private notes with the same maturity the opportunity to exchange their holdings for a new six-year 8.75% green bond. Genneia has placed a $200m limit on the exchange, which Moody’s and Fitch said would be considered distressed.  

Spanish and Latin American data centre firm Nabiax has added sustainability targets to €320m of its financing. The interest rate on the deal, for which BBVA acted as sustainable coordinating bank, is linked to the percentage of renewable electricity used by the firm, hiring targets for women, and water consumption.

UK housebuilder Berkeley has raised £400m from a 10-year green bond. The proceeds from the 2.5% bond, which received orders of £2.2bn, will finance the development of energy-efficient homes under its green bond framework.

Dutch communications company KPN has signed a €1bn sustainability-linked revolving credit facility with a consortium of 12 banks. The five-year facility is tied to reduction in energy consumption and Scope 3 emissions, as well as the rollout of fibre-optic internet in the Netherlands.

Austrian refractory supplier RHI Magnesita has taken out a two-year $200m sustainability-linked loan and five-year €600m sustainability-linked revolving credit facility. The two loans, which will be used for general corporate purposes, will have their interest rates tied to RHI’s EcoVadis sustainability rating. 

Sing Da Marine Structure has agreed APAC’s first green commercial paper guarantee with Crédit Agricole. The TWD5bn (€155.7m) facility is associated with Ørsted’s Greater Changhua Offshore Wind Farm, the construction of which Sing Da Marine Structure is involved in.

Sustainability-linked bonds could be generating a smaller greenium than green bonds, although the number of deals is still too small to be sure, according to research from Natixis. While the SLB market is growing rapidly, it could still be difficult to make comparisons in future as higher emitting companies choose SLBs over green bonds. The research also found that in Q2 2021, 72% of Euro-denominated corporate ESG bonds traded tighter than their non-ESG counterparts.

Colombian firm Aviatur has signed a COP70bn (€15m) sustainability-linked loan with BBVA, which is believed to be the first in the national tourism sector. The interest rate on the loan is tied to reductions in energy consumption at Aviatur’s Las Islas hotel in Cartagena.

Thailand’s Cal-Comp Electronics has signed a $350m sustainability-linked syndicated loan. The three-year loan, for which E. Sun commercial Bank acted as the sole mandated lead arranger, has an interest rate of 90bp over Libor, which will be reduced by 2bp if the electronics manufacturing services firm fails to meet GHG emission and electricity usage targets.

Oberlin College has raised $80m from a 30-year CBI-certified bond to partially finance its $140m sustainable infrastructure programme, which will convert college buildings to use geothermal heating and reduce water usage by 5m gallons a year. PIMCO was allocated 36% of the issue, which was three times oversubscribed, with 25% going to MacKay Shields and 15% to Goldman Sachs.

South Africa’s Fortress REIT has raised R900m (€51.8m) from a dual tranche sustainability-linked bond issue. Fortress said that proceeds from the 3-year R495m and 5-year R405m bonds would “assist” with the continued installation of solar energy across its retail and logistics portfolios. The interest rate is linked to increases in its installed renewables generation.