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Bonds & Loans: UK to consult with investors ahead of green gilt issuance

A weekly overview of ESG developments for fixed income

The UK’s Debt Management Office will consult with gilt investors and gilt-edged market makers next Monday, to sound out interest in the maturities, sequencing and precise timings of its two green sovereign bonds planned for later this year.

Google’s parent company Alphabet has allocated $3.4bn of its $5.6bn sustainability bond proceeds, with just under half going to clean energy. According to its annual impact report, Alphabet avoided almost 15m tonnes of CO2 through renewables contracts, as well as making 13,500 ‘Covid support’ loans to small and medium companies and 2,700 loans to black-owned firms.  

Singapore’s National Environment Agency has announced a S$3bn (€1.8bn) green bond programme to finance sustainable infrastructure projects in the country. One of the main projects identified in the agency’s green bond framework, which received a full alignment opinion from VE, is the Tua Nexus Integrated Waste Management Facility.

Cement firm Argos’ North America subsidiary has taken out a $300m sustainability-linked loan with BNP Paribas, Natixis, Sumitomo Mitsui and the Bank of Nova Scotia. The interest rate on the loan is linked to reductions in CO2 emissions and an increased percentage of women in leadership positions. 

Pittsburgh-based bank PNC Financial Services Group is understood to have raised $700m from its inaugural social bond, which will finance social projects that benefit low- to moderate-income communities, ethnic minority communities and vulnerable or underserved populations. 

German renewables company Encavis has signed a three-year €125m sustainability-linked loan with an interest rate based on its MSCI ESG rating – currently at the second highest level of AA.

Real estate specialist Emergence Plaza has raised 10bn CFA francs (€15m) from Côte d’Ivoire’s first ever green bond. The 8-year bond launched with a yield of 7.5% – 150bp lower than than the firm’s existing bank loan. Emergence Plaza is only the third non-financial green bond issuer in Africa.

The Intercontinental Exchange and Boston-based risQ have co-launched social impact scores for US municipal issuers based on data such as local poverty levels, education levels, racial diversity and unemployment. The scores assess the potential social benefit of an investment in a specific area, which is then mapped to municipal bonds, allowing investors to calculate the relative social impact of lending to the issuer.

US-based chemicals firm Cabot Corporation has added sustainability targets to its new $1bn revolving credit agreement. The interest rate on the five-year agreement is linked to the company’s credit rating and its performance against intensity reduction targets for sulfur dioxide and nitrogen oxide emissions.

South Korean firms are issuing record levels of ESG-labelled debt according to data from the Korea Exchange. Since the start of 2021, 116 Korean issuers have issued green, social or sustainability bonds worth ₩60.6tn (€43.8bn) – exceeding the ₩58.9tn raised by 23 issuers in the whole of last year. The market is dominated by social bonds, which have accounted for 70% of this year’s total, with state-run Korean Housing Finance Corporation the top issuer.

Brazil’s National Bank for Economic and Social Development has announced a R1bn (€161m) sustainability-linked loan programme to support Brazilian businesses focused on reforestation, small internet provision, renewables equipment manufacturers, miners and steel producers. Borrowers must commit to improving their sustainability indicators, with lower interest rates for achieving targets. The bank said it hoped to expand the programme to other sectors in future.

Turkish lender Akbank has signed a $300m sustainability-linked repurchase agreement with Deutsche Bank, with an interest rate linked to gender diversity, renewable energy sources, and the exclusion of funding for greenfield coal power plants. 

India’s Azure Power has secured the lowest ever yield for an Indian renewables firm on its latest $414m green bond, achieving a coupon 27.5bp lower than the previous record. The five-year bond launched with a coupon of 3.575% after the order book hit $2bn. 60% of notes went to US and European investors. Azure will use the proceeds to refinance its existing 5.5% $500m green bond, due 2022.