Vista Shipping scores US$89.6m sustainability-linked loan

Standard Chartered was appointed to lead a US$89.6 million sustainability-linked loan (SLL) for Vista Shipping, a joint venture between Hafnia and CSSC Shipping Hong Kong, to finance the purchase of its first pair of liquefied natural gas (LNG) dual-fuelled vessels in support of both organisation’s decarbonisation ambitions.

LNG dual-fuelled vessels, which are lower in emissions compared with traditional bunker fuel fleets, have grown in popularity in recent years among shipowners, lessors and operators as the maritime industry seeks to reduce carbon emissions.

Standard Chartered acted as the facility coordinator, sole sustainability coordinator, mandated lead arranger and facility and security agent for the transaction. The bank also assisted Vista Shipping in securing a second-party opinion on this loan from quality assurance and risk management company DNV, which confirmed that the key performance indicators and sustainability performance targets are material and align with its sustainability ambitions.

The SLL arrangement introduced ambitious targets on annual efficiency ratio and sulphur oxide emissions over 10 years, and has a bi-directional margin ratchet mechanism to incentivise performance in meeting these targets. The delivered vessels must also adhere to Hafnia’s Environmental Management System (EMS), which seeks to minimise adverse environmental effects and ensures that contractors follow precise EMS requirements for measurement and monitoring environmental effects.

“Building duel-fuelled vessels is an important part of Hafnia’s strategy to transition into a more sustainable maritime future,” commented Perry Van Echtelt, CFO of Hafnia. “Standard Chartered’s sustainability-linked loan structure aligns our organisational sustainability objectives to meet the loan KPIs.” 

 

Australian small businesses take pragmatic approach to rising cost environment 

Research released by Commonwealth Bank (CBA) shows that one in three small businesses are anticipating a drop in consumer demand, and many are yet to feel the full impact of the increasing cost of doing business.

Of those small businesses surveyed, the primary concern is an anticipated drop in consumer demand (36%), with inflation and other pressures expected to affect consumer spending. This was followed by the cost of business insurance (31%) and transportation and logistics costs (28%).

The research shows that small businesses are more prepared than ever, with many poised to act and recognise the need to adjust if the anticipated drop in consumer demand occurs. One-third of companies (33%) have already reduced spending on non-essentials, another one-third (32%) have adjusted personal spending, while (27%) are being more disciplined around budgeting and expense tracking.

Compared to consumers, small business owners continue to show lower levels of concern about the rising cost of living, but the proportion that are feeling the impact has increased since October 2022 when the survey was last conducted (+1%). While 20% (+4% vs Oct) report an operational impact, 23% (+5% vs Oct) report an impact on finance.

“While inflation is creating challenges for many small business owners, the sector remains focused on being prepared,” said Mike Vacy-Lyle, Group Executive, Business Banking at CommBank. “Australian entrepreneurs continue to show considerable grit and we are reminded of the amazing resourcefulness shown during Covid. We’re seeing customers respond in pragmatic ways by making adjustments to their operations in response to an anticipated reduction in consumer demand.”

 

World Trade Board launches plan to empower SMEs through trade and finance

The World Trade Board has opened a consultation on a new framework to increase access to trade finance for micro-, small and mid-sized enterprises (MSMEs). Developed with contributions from major industry bodies and international stakeholders, the Financial Inclusion in Trade Roadmap identifies five key areas where coordinated action can significantly impact. The Roadmap aims to accelerate change by providing a holistic public and private sector collaboration framework.

MSMEs make up around 90% of businesses globally but accounted for just 23% of applications for trade finance in 2020. Despite their low representation, these smaller firms comprised 40% of rejected trade finance applications. This mismatch between demand for and supply of trade financing, known as the trade finance gap, is snowballing – from an estimated $1.5 trillion in 2018 to $2 trillion in 2022, and shows no signs of slowing.  

“Difficulty accessing finance means MSMEs are greatly under-represented in global trade,” commented Michael Vrontamitis, Deputy Chair of the World Trade Board. “Many good ideas to increase financial inclusion have been put into action, but to accelerate progress we need to harness the knowledge and technology available to us into collective action. Our framework aligns diverse stakeholders towards a common vision, with clear lines of responsibility in a results-driven approach. We now invite the industry to provide feedback that will improve the Roadmap, then partner with us on implementation.”

The Financial Inclusion in Trade Roadmap suggests actions in five key areas:

Pillar 1: Digital infrastructure

Digital identities: Accelerate the adoption of digital identities, such as the Legal Entity Identifier (LEI) and Decentralised Identifiers, through mandated utilisation in the financial services sector.

Pillar 2: Legal/regulatory infrastructure

Support the adoption of, or alignment of legal frameworks with, UNIDROIT’s Factoring Model Law (FML), expected to be released in Q3 2023 and its broader implications and facilitate the adoption of efficient regulatory regimes.

Pillar 3: Data infrastructure

Gain access to trade receivables-related data points to update traditional credit-decisioning methods.

Pillar 4: Technical assistance

Support technical learning amongst financial institutions and MSMEs on legal, digital and data infrastructure matters.

Pillar 5: New funding sources

Develop an infrastructure to encourage investment in credible MSME trade finance assets.

Before the Roadmap is made final, The World Trade Board has invited comments and feedback from all stakeholders to help ensure the guidance can be implemented as broadly as possible.

 

Sustainable Fitch assigns inaugural ESG ratings to Severn Trent and its sustainable bond

Sustainable Fitch has assigned Severn Trent an ESG Entity Rating of ‘2’ and an entity score of 77. The agency also evaluated the sustainable bond it issued on 22 February 2022, to which Fitch assigned an ESG Framework Rating of ‘2’ and a framework score of 76. This led to a combined ESG Instrument Rating of ‘2’ and an instrument score of 86.

The ratings reflect the company’s overall good ESG profile, including for the framework, as a result of our assessment of the environmental and social impact of its water and wastewater activities and its business services activities. Fitch’s assessment included the eligibility and alignment of its business activities and use of proceeds with taxonomies of reference and its contribution to the UN Sustainable Development Goals.

The analysis also reflects how Severn Trent integrates environmental, social and governance considerations into the business and its strategy and management. It also considers how it evaluates, selects, manages and reports on the projects to which the bond proceeds have been assigned.

Severn Trent is a UK-listed public company and the ultimate parent of Severn Trent Water Limited and Hafren Dyfrdwy Cyfyngedig, which are two of the regulated water and sewerage companies in England and Wales. Other activities of the group include generating renewable energy from solar, wind, anaerobic digestion and hydropower technologies; provision of operating services for municipal and industrial clients; and management of owned surplus land.

Fitch views Severn Trent’s principal business activities positively from an environmental and social perspective, as they provide essential services for societies. The provision of water and wastewater services and the management of water resources is vital to improve public health, protect the ecosystem, eliminate pollutants and maintain the security of supply.

In 2022, Severn Trent confirmed its commitment to science-based targets in line with a 1.5°C pathway to reduce absolute emissions for Scopes 1 and 2 by 46% by 2031, from a base year of the financial year to end-March 2020 (FY20) and excluding offsets. This commitment is in addition to the group’s triple carbon pledge, which targets using 100% renewable energy for its consumption and generation, and operating a fully electric fleet (where available) by 2030.

Fitch’s assessment of the social profile is underpinned by the group’s strong commitments to uphold human rights and labour rights, high levels of customer satisfaction and its entrenched support for communities and financially vulnerable customers. In contrast, areas that weaken the social profile include a lack of gender diversity, with a 71% male workforce, which is in line with the average for the UK water sector but could improve as it is significantly below the average levels observed in other UK sectors; a relatively low gender pay gap score compared to peers; and only partial disclosure of diversity metrics.

Severn Trent also benefits from a good corporate governance profile, demonstrated through a well-structured audit process, and a high level of female representation and independent non-executive directors on the board. The group is one of four companies in the FTSE100 with women in key board roles and is recognised as a top performer in the FTSE Women Leaders reports from 2023 and 2022. It also has in place a robust risk management process as well as adequate tax management and financial reporting. The high CEO pay ratio of 90x for FY22 and a lack of other forms of diversity besides gender at the board level constrain the governance profile.

The group published its updated sustainable finance framework in July 2022. The sustainable bond proceeds were used to fund projects aligned with the ICMA Green and Social Bond Principles. The ESG Framework and ESG Instrument Ratings are to a large extend driven by Fitch’s assessment of the alignment of the use of proceeds with the relevant taxonomies.

Investments were also mapped to the group’s business plan outcomes. Green investments were dedicated to improving water quality, leakage and water abstraction; reducing sewerage pollution; improving the quality of land, biodiversity and rivers; and energy efficiency and emissions reduction. Investments in social projects included support for vulnerable customers and contributions to improve social mobility, reduce inequalities and improve education in the communities where Severn Trent operates.

As of 31 November 2022, Severn Trent had issued three sustainable bonds, which are all rated by Sustainable Fitch, for a total of £1.1bn; including the bond analysed in this report. It also has £1.35bn of sustainability-linked committed bank facilities in place.

 

SAP launches cloud ERP offering for midsize companies

SAP has announced a new offering to help midsize customers adopt cloud ERP that enables speed, predictability and continuous innovation. The firm says GROW with SAP customers will get the same best practices powering the world’s industry leaders, while benefiting from rapid deployment and frictionless updates.

Having benchmarked and defined best-in-class, industry-specific processes over its 50 years of operation, GROW with SAP provides these preconfigured best practices that midsize companies can immediately adopt. Embedded artificial intelligence (AI) and automation capabilities should mean customers see rapid results. The offering also brings together SAP S/4HANA Cloud, public edition, with accelerated adoption services, a global community of experts and free learning resources, helping customers go live in as little as four weeks.

GROW with SAP also includes the SAP Business Technology Platform, so customers can define their own processes in a cloud-native way using SAP Build. With SAP Build solutions, business users can create enterprise apps, automate processes and design business sites without writing code, an essential asset for those closest to the business who can create the solutions they need.

“SAP’s ERP offering has long enabled end-to-end transparency across the business for the world’s leading companies,” commented Christian Klein, CEO and Member of the Executive Board of SAP SE. “With GROW with SAP, we’re taking this to the next level for midsize companies, with a tailored offering that helps them grow their business.”

 

U.S. Bank opens European ETF servicing capability, secures first client

U.S. Bank has announced the launch of its new exchange-traded fund (ETF) services in Europe and their first client for this offering. U.S. Bank will support Horizon Kinetics’ European version of their Inflation Beneficiaries ETF, an actively managed fund that seeks to address inflation by identifying unique, scalable businesses that have the potential to thrive in an inflationary environment. The fund is structured as a UCITS ETF and will initially trade on Euronext Amsterdam.

“This is a new market for us and we are delighted that U.S. Bank is able to guide us with on-the-ground expertise to offer our European clients a product that will follow a similar strategy to the Horizon Kinetics Inflation Beneficiaries ETF, emphasising exposure to hard-asset, capital-light businesses,” said Alun Williams, chief operating officer at Horizon Kinetics.

With this launch, U.S. Bank is expanding its relationship with Intercontinental Exchange (ICE) as they adopt the ICE ETF Hub as a front-end and order entry platform for U.S. Bank’s ETF clients. The ICE ETF Hub streamlines primary market trading and allows seamless subscription and redemption flow from the authorised participant to settlement in the secondary market.

 

BillingPlatform and Conga to deliver revenue lifecycle solutions

BillingPlatform and Conga have announced an integrated, bi-directional connector between the companies’ platforms. This aims to provide enterprise customers with a complete quote-to-cash solution for complex revenue management.

As enterprises try to keep up with evolving customer demands and dynamic market conditions, a legacy approach to revenue management can inhibit their growth potential due to disparate solutions, manual processes, multiple data sets and revenue leakage throughout the quote-to-cash process. In addition, deals are becoming increasingly complex with new pricing strategies, including discounting, bundles and more, leading sales and finance teams to look for a complete and automated solution that generates detailed quotes and invoices so they can close the books faster and accurately recognise revenue.

The BillingPlatform and Conga connector brings together critical points in the revenue lifecycle — the transition from a quote to billing and revenue management. The partnership enables that connection for a seamless flow of data allowing sales teams to use Conga’s CPQ solution to create quotes and automatically transfer that detail into BillingPlatform for finance to invoice and then recognise the revenue.

“This direct integration enables our joint customers to create a unified process that seamlessly moves from quote and contract to order and through to cash collection - unifying revenue processes and reducing complexity to maximise cash flow,” said Grant Peterson, Chief Product Officer of Conga.