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Bonds & Loans: Wells Fargo issues inaugural sustainability bond

A weekly overview of ESG developments for fixed income

Wells Fargo has issued a $1bn sustainability bond, which will be used to support renewable energy, housing affordability and socioeconomic opportunity projects. The bond – the bank’s first sustainability bond –  will pay interest of 0.805% until May 2024 and then a compounded SOFR plus 0.51% until maturity in May 2025. Wells Fargo said that broker dealers owned by underrepresented groups including disabled veterans and people of colour would receive 75% of the underwriting fees. 

The US State of Connecticut achieved its lowest pricing spread in 10 years on its inaugural $300m social bond offering. The 10-year bond, which will be used to finance school construction, was offered alongside a $170m non-ESG bond. Orders on the bonds reached almost $3.4bn and the overall pricing was 1.9%. The state also raised $225m from a separate social bond issue to refinance previous debt incurred to finance new school construction.

Industrial gas giant Air Liquide has issued a €500m green bond to finance a number of sustainable projects, including in hydrogen, biogas and oxygen. The ten-year bond has a yield of 0.461%.

Renewable Energy Group has raised $550m from a green bond offering. The seven-year notes, with a 5.875% yield will be used to finance or refinance eligible green projects, including the expansion of REG’s biorefinery in Louisiana.

Pakistan’s Securities and Exchange Commission has released guidelines for the issuance of gender bonds. Funds raised from issuance should finance projects related to the upliftment of women and/or their economic empowerment. Examples of eligible expenditures include SME development, low income housing and agricultural development. All issuers who are eligible for debt securities including sukuk issuers, may issue gender bonds. The Pakistani government is expected to try and raise $500m this week from its inaugural green bond.

Taiwanese textiles firm Far Eastern New Century has issued Taiwan’s first social bond. The five-year NT$1.2bn (€35.5m) bond priced with a coupon of 0.52%. Proceeds will be used for eligible social projects including “supporting the underprivileged” and “providing epidemic prevention supplies for the fight against Covid”.

The Taipei Exchange has launched a dedicated sustainable bond segment. The segment launched with three social bond listings from CTBC Bank, KGI Bank and SinoPac and has since added a green bond from ECOVE Environment and Far Eastern New Century’s social bond.

Meanwhile, the Luxembourg Stock Exchange has celebrated the listing of the 1000th sustainable bond on the Luxembourg Green Exchange with the addition of the European Investment Bank’s 10-year $1.5bn Global Climate Awareness bond. The bonds listed on the Luxembourg Green Exchange have raised more than €500bn for green and social causes.

Crédit Agricole’s Taipei branch has issued an NT$1.7bn (€50m) “solidarity-based” green bond to finance its green loan portfolio, especially its exposure to offshore wind. In what Crédit Agricole claims is the first example of such an arrangement, the solidarity-based feature will see investors, lead managers and the issuer team up to make a financial contribution to non-profit Plastic Odyssey, a project to reduce plastic pollution in the ocean. 

The volume of sustainability-linked loans signed by US companies so far in 2021 is 292% higher than the whole of 2020, according to data from Bloomberg. Issuance in 2020 was slightly down from 2019 but the $52bn in loans agreed so far is more than the last three years combined. 

Polymetal International has agreed two $200m sustainability-linked loans with UniCredit and Raiffeisenbank, lasting for four and five years respectively. The interest rate on the loans is tied to the firm’s progress against its targets of reducing GHG emissions by 15% by 2025 and 30% by 2030. 40% of Polymetal’s total debt, a sum of $680m, is now in sustainability-linked or green financing instruments.

Marine company Seaspan has completed the private placement of $500m in sustainability-linked bonds in four tranches. Three tranches, a 10-year $150m tranche with interest rate of 3.91%, a 12-year $170m tranche with interest rate of 4.06% and a 15-year $130m tranche with interest rate of 4.26%, have already been sold and issued, with the fourth ten-year $50m tranche due to be issued in early August. The issuance attracted interest of $1bn, and forms part of a larger $2.5bn financing programme tied to sustainability-linked provisions with vessel charterers and improvements in vessel carbon intensity.

HICL Infrastructure has converted an existing £400m revolving credit facility into a sustainability-linked loan. The two-year facility, agreed with a consortium of lenders including Sumitomo, RBS International and National Australia Bank, is tied to a number of ESG targets including waste and emissions reductions.

Finnish housing firm Kojamo has successfully issued its €350m inaugural green bond. The eight-year bond, which has a fixed coupon of 0.875%, will be used to finance or refinance investments to promote energy efficiency in buildings. 

Swedish real estate firm Fastpartner has issued an SEK1.25bn (€123.5m) green bond. The four-year bond, which has an interest rate of 3-month Stibor plus 1.12%, attracted orders of SEK2.8bn. Proceeds will be used to finance eligible green buildings projects, renewable energy and energy efficiency. 

Turkish bank Yapi Kredi has secured a $962m sustainability-linked loan with a 42-strong consortium of financial institutions. Yapi Kredi will be entitled to an interest rate reduction on the loan, split between $351m and €501m tranches, if it achieves improvements in renewable energy supply and its ESG Risk Management Score.

Angel Oak Capital Advisors has raised $231m from a mortgage-backed securitisation which qualifies as a social bond. The securitisation pools 466 loans which offer mortgage financing solutions for homebuyers who are unable to borrow through normal lending channels, including self-employed borrowers. 

Polish oil refiner PKN Orlen raised €500m from its inaugural green bond issue. The firm, which has previously issued sustainability bonds, attracted orders of €3bn for the bond, which will be used to finance activities in the renewable energy, clean transport and plastic recycling areas. The bond priced with a coupon of 1.125%.