MUFG, acting as joint lead placement agent and ESG structuring agent, has priced the world’s first ESG-linked issuance with two-way pricing and the world’s first ESG-linked USPP issuance for Australia’s largest airport, Sydney Airport.
The market for sustainable financing is developing rapidly in Australia, with a range of sustainability-linked loan issuances occurring throughout 2019, including Australia’s first multi-bank ESG linked loan established by Sydney Airport. To date, however, there have been no issuances from borrowers in the US Private Placement market with a sustainability or ESG linkage where coupon payments can vary two-ways according to the performance of the borrowers’ sustainability and ESG metrics.
Sydney Airport has now priced a successful A$600m (equivalent) transaction, with tenors from 15 years to 30 years, including a world’s first 20-year ESG linked tranche. As part of the ESG-linked US private placement 20-year tranche, coupons can vary up or down periodically depending on Sydney Airport’s performance against its sustainability metrics over time, as assessed by an independent third party, Sustainalytics, a global specialised investment research and ratings provider.
“MUFG is delighted to have again assisted Sydney Airport in a highly successful and competitively priced US private placement issuance with a focus on lengthening its debt tenor and facilitating direct Australian dollar investment,” said Matthew Carr, MUFG’s managing director and head of Debt Capital Markets for Australia and New Zealand. “We are proud to have priced the world’s first ESG-linked tranche and to have partnered with Sydney Airport and USPP investors over the course of many months; from original concept through all structural aspects and ultimately an outstanding outcome providing a direct link between the Airport’s sustainability performance and its funding costs.”
Commenting on the financing, Michael Momdjian, Sydney Airport’s Group Treasurer, remarked: “We are proud to partner with MUFG to deliver a highly successful and innovative USPP transaction, including a world first that further exemplifies our leadership in moving loan and bond markets forward, while also reinforcing our commitment to sustainability.”
As a part of its Sustainable Development Goals, MUFG is aiming to provide a cumulative total of 20 trillion yen (~A$270bn) in sustainable finance between FY19 and FY30 to help build a sustainable society through the provision of financial services to its clients.
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