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Industry roundup: 26 June

Olam secures US$250m sustainability-linked loan

Food and global agri-business, Olam International Limited (Olam) and its wholly owned subsidiary, Olam Treasury Pte. Ltd. (OTPL), have secured a revolving sustainability-linked credit facility aggregating US$250m. The facility is linked to meeting key sustainability performance indicators (KPI). 

The facility consists of three tranches - a 1-year revolving sustainability-linked credit facility (SRCF) of US$50m, a 2-year SRCF of US$100m and a 3-year SRCF of US$100m. The interest margin on the facility is linked to the achievement of sustainability KPI improvement targets and could be lower than comparable conventional loans, if those targets are met.  

The KPIs will be tracked and reported by Olam’s Corporate Responsibility & Sustainability team. Ernst & Young will perform procedures to independently assess the achievement of the KPIs.  

Olam has appointed three banks - ANZ, DBS and Standard Chartered Bank as senior mandated lead arrangers and joint sustainability co-ordinators, and Rabobank as mandated lead arranger. Standard Chartered Bank has been appointed as the facility agent. Proceeds from the facility will be applied towards general corporate purposes of Olam and its subsidiaries.

This is the third such facility secured by Olam. It announced a US$525m sustainability KPI-linked RCF last year and Asia’s first sustainability-linked club loan of US$500m in 2018. 

 

FMSB issues Statement of Good Practice on algo trading

The FICC Markets Standards Board (FMSB) has published a Statement of Good Practice on Algorithmic Trading in FICC Markets as a transparency draft for market consultation. As the use of computer algorithms in FICC markets continues to increase, the potential for such trading activities to adversely impact market or firm stability, or result in harm to clients, also rises. Accordingly, algorithmic trading has increasingly been the subject of regulatory scrutiny and intervention.

This Statement of Good Practice draws on the work conducted by regulators to date and seeks to further enhance the integrity and effective functioning of FICC markets by promoting good conduct and governance practices for participants engaged in algorithmic trading across all FICC asset classes and markets, in particular those subject to less stringent regulatory requirements.

It sets out 10 Good Practice Statements that cover the governance and management of conduct risks associated with the use of algorithmic trading. FMSB members and other interested parties have been invited to comment on the proposed Statement of Good Practice. This consultation will run until Friday 21 August 2020 with the final document expected to be published shortly thereafter.

 

IMP+ACT Alliance launches ESG transparency solution 

The IMP+ACT Alliance has launched the IMP+ACT Classification System (ICS), a digital application that was developed in consultation with over 150 organisations including practitioners, NGOs, standard setters and academia. The ICS provides asset owners with more information about the types of impact occurring in multi-asset class portfolios, while supporting asset managers with a practical digital process that allows them to self-report how they currently classify measure and manage their ESG risks and impacts.

The system uses 'Impact Classes', a concept that was developed with a community of practitioners through the Impact Management Project (IMP) as part of its ongoing efforts to build global consensus on how to measure, manage and report impacts. Impact classes can be used to group investments with similar characteristics, even when asset managers are using different measurement and rating techniques. This categorisation will allow for an initial degree of comparability between the impacts of investments at portfolio level, while the market moves towards greater consistency in the way underlying impact data at enterprise level can be collected and reported.

The IMP+ACT Alliance is run as a public good programme. It is supported by the City of London Corporation, Deutsche Bank, the IMP and Bridges Insights, along with a network of strategic partners including, among others, the UK Impact Investing Institute, Toniic (specifically the Toniic Tracer platform), Impact Capital Managers, and the Make My Money Matter campaign. These strategic partnerships aim to enable cross-platform data sharing and foster consistency in the way information about impacts is shared, which could reduce the growing reporting demand for practitioners. 

 

Finastra launches LIBOR transition calculator service

Finastra has announced the availability of Fusion LIBOR Transition Calculator, a service that enables banks to calculate Alternate Reference Rates (ARR) or Risk-Free Rates (RFR). The calculator service works independently of Fusion Loan IQ, Finastra’s commercial lending solution. Built on FusionFabric.cloud, Finastra’s open innovation platform, the calculator’s open API facilitates the integration with systems that don’t yet have a solution in place for calculating ARR/RFR rates. This should reduce operational risk.

The calculator service independently accesses the ARR/RFR from external official sources such as the Federal Reserve Bank of New York for SOFR. It then calculates compounded in arrears rates and daily non-cumulative compounded rates, along with corresponding interest accrual amounts for a set of inputs. Depending upon the rate method chosen, the calculator has the flexibility to calculate the daily compounding rates for the whole period or only for the end date. It follows Finastra’s Fusion Loan IQ ARR calculations, which gives market participants consistent and accurate results.

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