Bonds & Loans: TELUS issues SLB with 1% step up

A weekly overview of ESG developments for fixed income: Reliance Rail signs A$1.8bn sustainability-linked green loan, ESG bonds were 20.2% of European issuance in 2021


Canadian telecoms firm TELUS has raised $900m from its inaugural sustainability-linked bond in the US. The firm will pay 3.4% on the 10-year notes, which will increase by 1% annually if the firm has failed to reduce its scope 1 and 2 emissions by 46% by 2030 against a 2019 baseline up to a maximum total increase of 1.5%. 

Canada’s Public Sector Pension Investment Board has raised C$1bn (€700m) from its inaugural green bond. The 10-year bond pays a coupon of 2.6%. Proceeds will be used to fund projects with high environmental impact across eight categories including renewables and energy efficiency. 

Saudi Arabia’s sovereign wealth fund has published its green finance framework with a second party opinion from DNV confirming its alignment with the green bond and green loan principles. The framework includes six categories of eligible proceeds including renewables, sustainable water management and green buildings. The fund may also seek certification from the Climate Bonds Initiative. 

Mizuho has raised $500m from an 8-year green bond to finance green projects including renewables. The bond pays a coupon of 3.261%. 

Reliance Rail has signed a A$1.8bn (€1.2bn) sustainability-linked green loan with a group of 12 lenders including BNP Paribas, ICBC, Mizuho and Natixis. The loan, the first of its kind in the APAC region, is linked to four targets: the firm’s Infrastructure Sustainability Council operations rating score, energy intensity, solar power generation and operational water consumption. The 21-year loan will refinance existing debt for the public private partnership, which was established by the New South Wales government to manufacture and maintain passenger trains. 

Evoqua Water Technologies has achieved the SPT attached to its $350m revolving credit facility at the first measurement date, and will now pay 5bp less interest, the firm has said. The facility, which was signed with a syndicate of lenders including BNP Paribas, ING and Credit Suisse last year, is linked to Evoqua’s overall management score as part of its Sustainalytics ESG risk rating.  

ESG bond issuance represented 20.2% of total European bond issuance during 2021, with issuance driven by large issues from sovereign and supranational issuers, according to new figures from the Association of Financial Markets in Europe. The spreads of ESG corporate bonds against their non-sustainable benchmarks have tightened from 9bp in April 2020 to 1-2bp in the first months of 2022. AFME said that growth in issuance would largely depend on corporate issuers as governments finalised and stabilised their sustainable financing programmes, with the utilisation of the securitisation market an important factor. Sustainable securitisation issuance reached €8bn in 2021, a 272% increase on 2020. 

Electrolux has raised SEK2bn (€187m) from a dual tranche green bond. Both tranches mature in February 2027, with a SEK750m tranche paying 1.705% and a SEK1.25bn with an undisclosed floating rate. 

Packaging manufacturer Constantia Flexibles has signed a €200m sustainability-linked revolver with a group of banks including Raiffeisen. The interest rate on the 5-year deal is linked to the firm’s EcoVadis rating. 

Singapore’s Lendlease Global Commercial REIT has signed an S$860m (€569m) sustainability-linked loan with Citi, DBS and OCBC. The loan, the largest sustainability-linked loan for an Asian REIT, is linked to undisclosed sustainability targets, and will be partially used to finance the acquisition of an office and retail development in Singapore. 

Hong Kong has postponed the launch of its retail green bond due to worsening Covid cases in the city. Preparations for the bond have been completed, but the government “decided to postpone the subscription period and issuance of the inaugural retail green bond in order to avoid the social contact arising from the application process and reduce the risk of the spread of the disease”, a spokesperson said. 

Foresight Solar Fund has signed a £150m sustainability-linked revolver with NatWest, AIB, Barclays and Lloyds to finance the acquisition and construction of solar and battery projects for its portfolio. The interest rate on the facility, which has an accordion of up to £30m, can vary between 185bp and 195bp over SONIA or EURIBOR depending on currency drawdown, based on performance against three targets: a year-on-year increase in renewables generation and battery capacity, an increase in the value of the fund’s annual contributions to community funds, and the implementation of enhanced ESG reporting for suppliers to portfolio assets. 

UK private healthcare firm Spire Healthcare has added sustainability targets to its refinanced £425m credit facility, signed with a group of nine banks. The interest rate on the loan, composed of a £325m loan and £100m revolver, is linked to “environmental and quality factors” according to a regulatory filing.  

The EBRD has invested €8.7m in a €43.7m green bond from French renewables firm Qair. The 5-year bonds were placed exclusively with European investors, with proceeds earmarked for financing new renewables assets in Europe, in line with the firm’s targeted 1GW capacity by the end of this year. The EBRD said that Qair had pledged to spend at least twice its investment on projects in EBRD countries of operation within the next three years. In other renewables news, Pacifico Renewables Yield has signed a €35m green loan with UBS Asset Management. The 5-year loan pays 4.85%, and will mostly be used to repay existing debt and refinance the firm’s revolving credit facility.