LOANLYPLANETEuropean disclosure rules to force private debt funds to address ESG

– by Prudence HoEuropean private debt fund managers are

facing pressure to address environmental, social and governance issues as they get swept up in new and far-reaching disclosure regulations laid out by the European Parliament on sustainable investments.

Earlier this year, the European Parliament set out rules that will require most asset managers, including private fund managers, to disclose how sustainability issues affect the value of their investments.

Private debt fund managers may struggle to adopt this regulation as direct lending has been slow to embrace ESG due to its opaque nature and a lack of pressure from investors to ‘go green’.

“I don’t think they have yet given it a huge amount of thought,” said a partner at a law firm who works extensively with private debt funds. “And they have to face it now.”

Most private debt funds do not have an ESG policy, and some invest in industries that are not seen as environmentally-friendly. Under the new rules, fund managers will be unable to hide those investments.

“Fund managers are expected to give informa-tion on their ESG policies, and how they integrate

GREENSHOOTS

A Refinitiv LPC publication | Covering Green, Sustainable and Positive Incentive Lending Globally | December 2019

LARGEST 10 DEALS to dateIssuer |Deal Size| Market1. Carrefour | €3.9bn| France2. SNCF | €3.5bn| France3. E.ON AG | €3.5bn| Germany4. Prologis | US$3.5bn| US5. TenneT TSO BV | €3.0bn| Netherlands6. Beatrice Offshore |£2.54bn| UK7. Suez Environ SA | €2.5bn| France8. HCP Inc. | US$2.75bn| US9. Solvay | €2.0bn| Belgium10. Carnival Corp | US$2.4bn| US

FAST FACTS Nearly US$113bn in global green and

sustainability-linked loan volume has been announced this year.

BNP Paribas will no longer provide financing to companies in the thermal coal sector anywhere in the world by 2040. The bank will eliminate its exposure to thermal coal among the European Union member states by 2030 and has set a financing target of €18bn in support of the development of renewable energies by 2021.

Japanese shipping firm, Nippon Yusen KK, signed a ¥50bn five-year sustainability linked loan at the end of November, marking the first such loan issued in Japan.

Over €2.6bn in ESG-linked Schuldscheins have come to market so far this year amid strong investor support.

material sustainability risks into investment decision-making,” said Vanessa Havard-Williams, global head of environment at Linklaters. “Since that kind of risk should normally be considered whether or not your fund has an ESG focus, this is not something managers can readily discount as irrelevant to their funds.”

Additional disclosure requirements will apply to funds that are marketed as sustainable in-vestments or as having environmental or social objectives. Fund managers will be obligated to disclose the sustainability objectives and infor-mation on the methodologies used to assess their impact or characteristics, Havard-Williams said.

The rules aren’t expected to be introduced until the first quarter of 2021, and implemen-tation may be delayed if the guidelines aren’t finalised in time.

WEAK TRANSPARENCYWhile fund managers still have at least a year

to prepare for the new rules, a major stumbling block is likely to be the lack of ESG transparency for small privately-owned businesses.

“The reality of the situation is a company with 100 employees, and they are unlikely to report their carbon footprint,” said Archie Beeching, director of responsible investment at Muzinich

A Refinitiv LPC Publication © 2019 Any copying, redistribution (including electronic forwarding) or republication of Refinitiv LPC and Refinitiv publications, or their content is strictly prohibited. For more info email @ lpc.americas@refinitiv.com.

(STORY cont’d on p. 2)

ESG & Green Loans Now available in Dealscan. 1. Search Market Segments under Tranche2. Select ESG, Green Loan, or both

3. Add them to your list of criteria

Contact us for more information:

Americas: lpc.americas@refinitiv.com

EMEA: lpc.europe@refinitiv.com

Asia Pacific: lpc.asiapacific@refinitiv.com

EMEA Americas APAC Japan$0

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Nearly US$113bn in global green and ESG loan volume announced YTD 2019

LOANLYPLANET © | Page 2

(STORY cont’d from p. 1)

COVER STORY

which recently announced its first close of a European private debt fund with an ESG focus.

European lower mid-market private debt lender Kartesia echoed the view.

“ESG information and reporting from small mid-market companies is limited,“ said Coralie De Maesschalck, head of portfolio and ESG at Kartesia. “While with primary deals we can still manage to get access to management and increased reporting on ESG, it will be more chal-lenging with our secondary debt investments.”

To increase their influence, direct lenders need to unite in order to persuade middle market bor-rowers to increase their adoption of ESG issues.

“If you are the only investor to ask difficult ques-tions, companies may look for another offer,” said Beeching, who is also an ESG committee member of the European Leveraged Finance Association.

Streamlining questions that investors frequent-ly ask relating to ESG is one of the options that the ELFA is considering to assist direct lenders.

“It’s a challenge for SMEs to respond to 100 different ESG questions from 100 different investors.” said Beeching. “We need a balance between having a template and avoiding a box-ticking exercise.”

IN THE NEWS

(NEWS cont’d on p. 4)

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France 18%

Spain 14%

United Kingdom 11%

United States(7%)Germany 6%

Netherlands 6%

Hong Kong 5%

Italy 5%

Singapore 4%

Finland 3%

Belgium 3%Australia 3%

Other 13%

France, Spain and U.K. dominate green and ESG lending

Johnson goes sustainable Multinational building systems group Johnson

Controls International plc has tied the pricing of US$3bn of its senior revolving credit facilities (RCFs) to employee safety and greenhouse gas (GHG) emissions, becoming one of the first industrial companies to link RCFs to specific sustainability metrics in the US syndicated loan market.

The sustainability-linked facilities include a US$2.5bn five-year RCF and a US$500m 364-day RCF.

The five-year facility replaces an existing US$2bn RCF that was due to mature in August 2020. The 364-day facility includes a one-year term out option.

The financing pays a margin and facility fee linked to ratings (see LoanConnector.)

Margins and facility fees can be further ad-justed, up or down by up to 4.5bp and 0.75bp, respectively on an annual basis, depending on Johnson Controls’ performance on metrics aligned to employee safety, the reduction of GHG emissions from energy efficiency and renewable energy customer projects and reductions in GHG emissions from internal operations.

Employee safety is based on the Total Record-able Incident Rate (TRIR) measured as the number of incidents per 200,000 workhours according to the reporting rules of the US Department of Labor - Occupational Safety and Health Admin-istration Severe Injury Reports.

Adjustments are based on a TRIR threshold of 10% over an increasing target level up to 2025.

For reported TRIR above the 10% threshold the margin would increase by 1.5bp and the facility fee increases by 0.25bp, for reported TRIR less than or equal to the TRIR threshold, but higher than the TRIR target there is a 0.0bp adjustment; and for reported TRIR of less than or equal the TRIR target the margin fee decreases by 1.5bp and the facility fee increases by 0.25bp.

Similarly, adjustments on GHG intensity and GHG savings are also based on thresholds of 10% over pre-set target levels up to 2025.

For reported GHG intensity above the 10% threshold the margin increases by 1.5bp and the facility fee increases by 0.25bp, for reported GHG intensity of less than or equal to the threshold, but higher than the target level there is a 0.0bp adjustment; and for reported GHG intensity of less than or equal to the target the margin de-creases by 1.5bp and the facility fee decreases by 0.25bp.

For reported GHG savings less than the 10% threshold, the margin increase by 1.5bp and the facility fee increases by 0.25bp, for reported GHG savings greater or equal to the threshold, but less than the target level there is a 0.0bp adjustment; and for reported GHG savings of greater than or equal to the target the margin decreases by 1.5bp and the facility fee decreases by 0.25bp.

“Our products and services empower our cus-tomers and communities to consume less energy and conserve resources; that is why I am proud

Source: The Loan Syndications and Trading Association, Loan Market Association, and Asia Pacific Loan Market Association

Cornerstones of Sustainability/ESG-Linked Loans

LOANLYPLANET © | Page 3

GREEN LENDING ATLAS

Global: BNP Paribas will stop financing the thermal coal sector worldwide by 2040

UK: Co-opera�ve Group has agreed a £400m sustainability-linked RC.

Singapore: Hoi Hup Realty has obtained a S$332.5m (US$244.2m) green loan to part its acquisi�on of luxury hotel Andaz Singapore.

US: Johnson Controls �ed the pricing of US$3bn of its senior RCFs to employee safety and greenhouse gas emissions.

Spain: Cementos Molins has agreed to a €180m loan, the first company in the Spanish cement sector to sign a sustainable loan.

Hong Kong:Langham Hospitality raised a debut HK$7.5bn (US$958m) sustainability-linked loan from eleven lenders.

Germany: Con�nental AG has agreed to a €4bn RC with interest linked to the company’s sustainability performance.

Russia: Metalloinvest has agreed to a €200m pre-export sustainability-linked financing with a club of seven banks.

Japan: Nippon Yusen signed a ¥50bn (US$457m) commitment line, marking Japan's first sustainability-linked loan.

France: Air Liquide has amended its exis�ng €2bn RC, linking pricing to its corporate social responsibility targets.

LEAGUE TABLES

Total Volume MarketRank Lender Parent Deals (m)(USD) Share 1 BNP Paribas SA 60 6,064.69 6.3% 2 ING Group 49 4,710.42 5.3% 3 Banco Santander SA 38 4,148.91 4.9% 3 HSBC Banking Group 38 3,890.63 4.8% 5 Credit Agricole Corp & Invest Bank SA 36 3,796.73 4.9% 6 Societe Generale SA 34 3,539.55 4.8% 7 Banco Bilbao Vizcaya Argentaria SA [BBVA] 28 3,244.89 4.7% 8 Citi 24 3,239.73 4.9% 9 Barclays 23 2,335.52 3.7% 9 Bank of China Ltd 23 1,332.54 2.2%

YTD’19 Global Green & ESG-linked Global Top Tier Lender League Table (by Deal Count)

Total Volume MarketRank Lender Parent Deals (m)(USD) Share 1 BNP Paribas SA 64 63,569.11 4.9% 2 ING Group 53 48,377.73 3.8% 3 HSBC Banking Group 42 46,440.16 3.6% 4 Banco Santander SA 39 42,914.37 3.3% 5 Credit Agricole Corp & Invest Bank SA 38 48,310.44 3.8% 6 Societe Generale SA 36 44,278.51 3.4% 7 Banco Bilbao Vizcaya Argentaria SA [BBVA] 32 31,921.27 2.5% 8 Citi 27 38,513.57 3.0% 8 Barclays 27 35,846.43 2.8% 8 Mitsubishi UFJ Financial Group Inc 27 28,065.91 2.2%

YTD’19 Global Green & ESG-linked All Participant Level League Table (by Deal count)

Source: Refinitiv LPC

Source: Refinitiv LPC

LOANLYPLANET © | Page 4

IN THE NEWSthis industry-leading commitment tied to our line of credit demonstrates that sustainability is at the heart of our vision and values,” George Oliver, chairman and CEO of Johnson Controls, said.

A total of 18 banks committed to the facilities, which were led by joint lead arrangers and joint bookrunners were JP Morgan, Bank of America, Barclays Bank and Citigroup.

ING Bank was sustainability structuring agent.MUFG Bank, Credit Agricole CIB, Deutsche Bank,

Standard Chartered Bank, TD Bank, UniCredit, US Bank, Wells Fargo, BBVA, Bank of New York Mellon, Danske Bank, ICBC and Westpac also participated.

Ireland-domiciled Johnson Controls is listed in New York and rated BBB+ by S&P, Baa2 by Moody’s and BBB by Fitch. – AR

Brown companies step up for sustainability loans Five companies from Europe’s heavy industrial

sector have signed a combined €7.5bn of sustain-ability-linked loans in recent days, but the deals

have raised difficult questions about whether the targets being set are ambitious enough.

French industrial gas manufacturer Air Liquide, Spanish cement group Cementos Molins and three German companies - car parts maker Conti-nental, chemicals group Lanxess and engineering group Norma - have all tapped the loan market for sustainability-linked loans.

While the extension of sustainable financing to carbon-intensive companies is controversial, many see it as essential to cutting emissions and meeting the goal of the Paris Agreement to limit global warming to 1.5 degrees.

“Transactions in high carbon-intense sectors should be considered transition deals,” said Trevor Allen, a sustainability research analyst at BNP Paribas. “We want brown companies to acknowledge that they’ve got to shift to a low-carbon strategy.”

A handful of bonds linked to the UN’s Sustain-able Development Goals have printed this year (most notably from Italian power company Enel), but most sustainability-linked financing has been

done in the private loan market, which means that the KPIs have been buried and not clearly defined or subject to public scrutiny.

Many of the KPIs on early sustainability-linked loans are viewed as ineffective and even unfit for purpose.

Banks are gaining expertise as the market evolves and matures, but setting KPIs is still hampered by a lack of standardisation around the approaches and data used.

“The KPIs we see in the market today are not as impactful as they could be, but they are meaningful because we’re at the beginning of the journey of making a sophisticated model to price sustainability and therefore assets,” Allen said.

Banks subsidise sustainability-linked loans by giving companies discounts for hitting targets.

AMBITION REWARDED?Continental acknowledged that current KPIs/

benchmarks vary greatly. It said that it is com-mitted to becoming more sustainable - and that

(NEWS cont’d from p. 2)

(NEWS cont’d on p. 5)

Numbers: Deal by year, region

Line: Coldplay’s 2016-2017World Tour �ight path

2019: 582018: 52

2019: 32018: 1

2019: 1042018: 100

2019: 2112018: 143

2019: 472018: 24

Source: Refinitiv LPC, Wikipedia

Coldplay, Pearl Jam, lenders incorporate ESG criteria.ESG

In November, Coldplay announced it was pausing future tours until it finds a way to make them more environmentally sustainable. This is not a small move. The band’s last tour for its “A Head Full of Dreams” album generated over US$500m. It follows on the heels of Pearl Jam, which has been involved in sus-tainability efforts since 2006 and most recently mitigated 3,500 tons of CO2 emissions from their 2018 European and US tours via an investment project in Alaska in partnership with ClimeCo. They offset an additional 2,500 tons produced from their 2018 Brazilian tour dates by investing in a reforestation effort by Amazonia Live in partnership with Conservation International. What does any of this have to do with the loan market? Quite a bit. At over US$113bn green and sustainability linked loan volume is not only setting records but establishing a baseline for expansion. An additional US$162bn has come through the bond market, up 32% compared to the same time last year. None of this has arguably come without a cost to lenders, issuers and, of course, rock stars. Lenders are providing incentivized pricing based on issuers meeting stated ESG goals. Issuers are investing in sustainability linked oversight measures. Market attention is growing. Nearly €2.6bn in new CLO issue out of Europe is ESG compliant or restricted and in November, Nomura launched the Nomura BPI SDGs Bond Perfor-mance Index composed of 105 publicly listed green and sustainability linked bonds issued since September 2016. Perhaps he wasn’t talking about the planet, but Chris Martin’s lyrics ring a bell: “And I will try to fix you.”

LOANLYPLANET © | Page 5

the KPIs on its loan reflected that - but drew a contrast with other sustainable loans that do nothing more than maintain the status quo.

The car parts maker has committed to sourc-ing more renewable electricity, increasing the proportion of women in management positions, reducing the accident and sickness rate among its employees, and increasing the proportion of recycled waste.

Lanxess, meanwhile, committed to one envi-ronmental KPI and one social KPI - to increase the proportion of women in its top three man-agement levels. It currently has no women on its board.

MATERIAL TARGETSESG specialists insist that green structuring

agents are getting more sophisticated in setting targets that are material to companies’ business and strategy, and are increasingly raising the bar for unambitious companies.

“It is the responsibility of the structuring adviser to make sure that this is not too easy a task,” said Orith Azoulay, global head of green and sustain-able finance at Natixis. “Banks are lowering the margin and there’s a price for it - and that price is ambition.”

EASILY MEASUREDThe most common and easily measured KPI in

the ESG world centres around CO2 emissions, which can be verified by the Greenhouse Gas Protocol and organisations such as CDP, the carbon disclosure project. But even here the range of strategies relating to CO2 measurement highlights differences in approach.

Air Liquide has a KPI to reduce carbon intensity, calculated as direct and indirect kilogram-equiv-alent CO2 emissions. Cementos Molins has also committed to reducing CO2 emissions, but already uses the reduction of CO2 emissions per tonne of cement to determine its managers’ pay.

Lanxess has committed to reducing its Scope 1 emissions, which are all direct emissions that are under its control. Lanxess has set its own CO2 reduction targets, which will be verified by an independent auditor.

Science-based target-setting is seen as critical to maintain the integrity of sustainability-linked financing. Some 732 companies are taking science-based climate action and 312 compa-nies have approved targets, according to the Science-Based Targets initiative.

“Banks assess risk; if they know the metric, they can assess the risk and look for opportunities in markets. If we’re going to align to 1.5 degrees, scientists need to set the targets and goals with banks,” Allen said. – TW

BNP creates new team BNP Paribas is creating a sustainable finance

markets team to help companies incorporate sustainability into their debt financing, in a move that will combine the bank’s bond and loan sustainability teams.

Helaba arranged the financing which was fully placed and executed on the VC Trade digital SSD platform.

The green SSD is supplemented with classic Namensschuldverschreibungen with maturities of up to 30 years.

“The upcoming investment by municipal and public housing companies in creating affordable housing and housing refurbishment of the hous-ing stock necessary for climate policy is optimally suited for green and social Schuldschein financ-ing,” Andreas Petrie, head of primary markets at Helaba, said. – AR

Lanxess signs €1bn sustainable RCGerman specialty chemicals group Lanxess

has signed a €1bn revolving credit facility (RCF) with a margin linked to environment, social and governance (ESG) criteria.

The core RCF, which replaces Lanxess’ existing €1.25bn RCF which was due to mature in May 2023, has a five-year maturity with two one-year extension options.

“We have used the good capital market envi-ronment and our solid investment grade rating to secure Lanxess’ long-term financing on attractive terms,” Michael Pontzen, Lanxess’ CFO, said.

Margins are linked, among other things, to the successful reduction of its Scope 1 (direct emissions from owned or controlled sources) greenhouse gas emissions; and an increase in the proportion of women on the top three management levels.

‘We are convinced that sustainable criteria are also becoming increasingly important for the capital markets,” Pontzen said.

“We have therefore developed this innovative financing concept together with our banking partners. With the ‘sustainable’ revolving credit facility, we are also underlining our commitment to achieving our ambitious climate targets.”

In November, the company said that it will go climate neutral and eliminate its greenhouse gas emissions of currently around 3.2 million metric tons of CO2 by 2040.

Deutsche Bank and UniCredit coordinated the RCF with a syndicate of 12 banks.

Lanxess is rated BBB by S&P and Baa2 by Moody’s. – AR

Muzinich closes fundMuzinich has announced the first closure of

its European Senior Secured Private Debt Fund at €104m.

The fund will invest in euro-denominated se-nior secured first-lien loans for European SMEs, excluding the UK, and will target sponsor-backed as well as corporate borrowers.

Target yield is 4% above Euribor and ticket sizes range between €10m and €25m, the direct lender said.

Starting immediately, co-heads Agnes Gourc and Cecile Moitry will lead the team, which will be focused on the EMEA market and be based in London, Paris and Lisbon.

The move reflects the sustained business and revenue growth that the team has seen in 2019 as the profile and volume of sustainable financ-ing continues to rise and companies accelerate their progress towards the UN’s Sustainable Development Goals.

The team is part of ambitious wider sustain-ability transformation plans and corporate so-cial responsibility policies for the bank’s global investment banking arm, that are also designed to streamline its operations.

“Sustainable finance is at the core of BNP Paribas strategy, and the bank has integrated sustainability across its business lines,” said Con-stance Chalchat, head of company engagement at BNP Paribas CIB.

The focus on sustainability in the wider banking industry is continuing apace as banks ramp up their ESG credentials.

Barclays launched a sustainable and impact banking group in November to find and invest in companies at the forefront of the battle against climate change and Citigroup created a new role to lead environmental, social and governance issues in its markets arm.

BNPP’s move towards a multi-product origi-nation approach and away from single product specialism will also help to coordinate deal execution and structuring.

The bank has a leading position in sustainabili-ty-linked loans, and is top of Refinitiv LPC’s global green and ESG-linked loan league tables, with 64 deals totalling US$63.6bn this year, and was also a joint bookrunner for Italian utility Enel’s first sustainability-linked bonds in September.

The bank is a member of the Principles for Responsible Banking and has also committed to align with the Paris Agreement to finance a low-carbon economy through the Collective Commitment to Climate Action.

It also recently announced its commitment to protect the oceans (SDG 14, life below water) by putting €1bn by 2025 to finance the ecological transition of vessels. – TW

NHW places green SchuldscheinGerman housing, construction and develop-

ment group Nassauische Heimstaette I Wohn-stadt (NHW) has placed a total of €180m of green Schuldscheindarlehen (SDD) and longer-dated Namensschuldverschreibungen.

The financing includes a green SSD of €80m, which closed with a multiple oversubscription, and comprises maturities of 10, 15 and 20 years.

NHW will use the financing to modernize its housing stock. Under the green financing, NHW has to prove that it is using the funds to promote sustainable projects.

The company has an agreement with majority owner, the state of Hesse, to make its housing stock climate neutral by 2050.

IN THE NEWS(NEWS cont’d from p. 4)

(NEWS cont’d on p. 6)

LOANLYPLANET © | Page 6

IN THE NEWS(NEWS cont’d from p. 5)

“Senior secured debt instruments offer in-vestors a lower-risk approach to private debt investing. These instruments tend to have statistically higher recovery rates, possess su-perior documents and provide strong covenant protection,” Sandrine Richard, co-head of senior secured Europe said in a statement.

The fund implements environmental, social and governance considerations and monitoring into its investment process, according to the lender.

“Muzinich has been a signatory to the PRI since 2010 and is applying experience gained from integrating ESG considerations into the public debt investment process to our latest private debt strategy,” Archie Beeching, director of responsible investment at Muzinich said. – KK

Continental goes sustainable German automotive supplier Continental AG

has agreed a €4bn five-year revolving credit facility (RCF) with interest linked to concrete improvements in the company’s sustainability performance.

The facility refinances an existing €3bn RCF that was due to mature in April 2021 on improved terms.

Continental has become the first German au-tomotive company to include specially defined sustainability indicators in its credit agreement with its core banks.

The margin on the facility will decrease or increase depending on whether Continental improves its sustainability performance based on criteria including securing electricity exter-nally from renewable sources; increasing the proportion of women in management positions; reducing the accident rate and sick rate; and increasing the proportion of recycled waste.

“This year, the executive board adopted our updated sustainability strategy. By combining sustainability improvements with our new credit line, we have found an innovative way in corpo-rate finance to further advance Continental’s sustainability strategy,” Stefan Scholz, head of finance & treasury at Continental, said.

Continental said that similar credit lines with sustainability components in the market were only aimed at achieving or maintaining selected sustainability ratings. Since the benchmarks of current ratings vary greatly, the company was committed to achieving specific improvements in sustainability performance as part of the new credit facility.

The facility helps support the company’s global sustainability goals, which are tied to the Sustainable Development Goals (SDGs) of the United Nations and to the Paris Agreement, among others.

The RCF is being provided by a syndicate of 27 banks led by BNP Paribas and Deutsche Bank. BNP Paribas is sustainability adviser.

Continental is rated BBB+ by S&P and Fitch. – AR

Langham completes loanLangham Hospitality Investments Ltd, the hotel

assets spinoff of Hong Kong developer Great Eagle Holdings Ltd, has raised a debut HK$7.5bn (US$958m) sustainability-linked loan from eleven lenders, sources said.

HSBC was the coordinator of the four-year facility, which offered an all-in pricing below 100bp based on an initial interest margin of 83bp over Hibor.

The other banks that have joined HSBC as mandated lead arranger are: Agricultural Bank of China Hong Kong branch, Bank of China (Hong Kong), Bank of Communications Hong Kong, China Construction Bank, Chong Hing Bank, Hang Seng Bank, Industrial and Commercial Bank of China, Mizuho Bank, OCBC Bank and Sumitomo Mitsui Banking Corp.

LHIL Finance Ltd is the borrower of the deal, which comprises a HK$6.8bn term loan (tranche A) and HK$700m revolving credit facility (tranche B).

The margin will reduce by 1bp for each of three sustainability key performance indicators the borrower fulfils, including energy consumption, wastes sent to landfills, and EarthCheck achieve-ment level. The interest margin will step up by 8bp if the borrower’s Ebitda to financial charge ratio falls below 2x.

LHIL’s three portfolio hotels in Hong Kong – The Langham, Cordis and Eaton – will serve as security for the loan.

Proceeds raised will refinance of a HK$7.2bn four-year loan from March 2016, and general corporate purposes.

Citigroup and HSBC were the mandated lead arrangers, bookrunners and underwriters, while China Construction Bank Asia was the MLA and underwriter of the 2016 facility.

The financing, which paid a top level all-in of less than 120bp based on a margin of 98bp over Hibor, attracted 14 others in general syndication. (March 18 2016 story) – CW

Cementos Molins agrees loanSpanish cement group Cementos Molins has

agreed a €180m five-year sustainability-linked loan, the first company in the Spanish cement sector to sign a sustainable loan.

The financing comprises a €40m term loan and a €140m revolving credit facility.

Margins are linked specifically to the company’s performance on the reduction of CO2 emissions.

The company already uses the reduction of CO2 emissions per ton of cement as one of the key indicators for its sustainability barometer, an evaluation mechanism determining the variable remuneration of its managers.

The loan was coordinated by CaixaBank, with Banco Sabadell, BBVA, Banco Santander and HSBC also participating. CaixaBank is also facility agent.

Cementos Molins manufactures, distributes and sells cement, concrete, mortars, aggregates and concrete prefabricates. The company is active in Spain, Argentina, Uruguay, Mexico, Bolivia, Columbia, Bangladesh and Tunisia. – AR

Metalloinvest signs €200m PXFRussian iron ore company Metalloinvest has

agreed a €200m 6.5-year pre-export financing with a club of seven banks.

Metalloinvest intends to convert the new PXF, which was coordinated by ING, into a sustain-ability-linked facility. Societe Generale was also part of the bank group.

“This loan has the longest maturity for the pre-export financing ever attracted by the compa-ny from international banks. Further, the parties intend to link the loan pricing to the sustainable development indicators,” said Alexey Voronov, finance director of Metalloinvest.

Metalloinvest wanted the deal done quickly, so there was not time to agree the sustain-ability-linked details in advance of signing, one banker said.

“Pricing in Russia is turning against borrowers at the moment so Metalloinvest wanted to get the deal done fast,” he said. “We will now work together on a sustainability-linked covenant and add it to the facility eventually, but it is not happening immediately.”

The loan, which has a grace period of 5.5 years and semi-annual amortisation, will be used to improve Metalloinvest’s maturity profile, diver-sify its foreign currency liabilities and reduce its borrowing costs.

The interest rate of the loan is fixed for the entire loan period.

In April, Metalloinvest signed a US$100m loan with a margin linked to the company’s corporate social responsibility rating. The financing was provided by ING and matures in November 2020.

The CSR rating is assessed and assigned by independent sustainability performance rating agency EcoVadis. EcoVadis awarded Metalloin-vest a debut CSR rating of ‘Silver’ in 2018.

The company was last in the market for a PXF in January 2018, when it signed a US$240m four-year PXF with a group of eight banks. – SB

Hoi Hup Realty raises Green loanSingapore property developer Hoi Hup Re-

alty Pte Ltd has obtained a maiden S$332.5m (US$244.2m) green loan to part finance its acquisition of luxury hotel Andaz Singapore, according to a press release.

Maybank, OCBC Bank and United Overseas Bank provided the loan, which closed as a club. OCBC acted as sole Green loan advisor.

In October M+S Pte Ltd, a joint venture between Malaysian sovereign wealth fund Khazanah Nasi-onal Bhd and Singapore state investor Temasek Holdings Pte Ltd, announced that it will sell Andaz Singapore to Hoi Hup Realty for S$475m.

This financing was issued under Hoi Hup Realty’s green loan framework, which was developed for the acquisition of Andaz Singapore in accordance with the Green Loan Principles issued in 2018 by the Loan Market Association and the Asia-Pacific Loan Market Association.

The developer’s subsidiary, Ophir-Rochor Hotel, is the borrower. Green loans have picked up mo-mentum in Singapore as part of the city state’s ambitions to be a hub for green finance. – MJ

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