Aiming to reduce its carbon footprint, LANXESS has placed its first sustainability-linked bond on the European capital market.
The specialty chemicals company LANXESS has recently underpinned its commitment for sustainable finance by placing its first sustainability-linked bond on the European capital market. The benchmark bond, with a volume of €600 million, has a tenor of eight years and a coupon of 0.625%.
The interest rates of the bond are linked to the achievement of LANXESS’ climate target: the company aims to reduce its CO2e emissions by 600,000 metric tons to 2.6 million metric tons by 2025 compared to the base year 2018. If the target is not achieved, the interest rate will increase by 0.250% per annum for subsequent interest periods until maturity.
“With this bond, we have already fully completed the financing of the planned acquisition of IFF Microbial Control. We are pleased to see the positive response from the capital market. With our first sustainability-linked bond, we are underlining our commitment to sustainability also in our financing activities,” stated LANXESS Chief Financial Officer Michael Pontzen.
For the issuance of sustainability-linked bonds, LANXESS has established a framework to provide the necessary transparency to investors, aligning with the “Sustainability Linked Bonds Principles” of the “International Capital Market Association” (ICMA).
The company has been active in sustainable financing already at an early stage: in December 2019, it had in fact agreed on a sustainable revolving credit facility of €1 billion with interest rates linked to the successful reduction of its CO2e emissions (Scope 1) and the increase in the proportion of women on the top three management levels.
The new bond is listed on the Luxembourg Stock Exchange in denominations of EUR 100,000. LANXESS’ issuer ratings are currently Baa2 (Moody's), BBB (Standard & Poor's) and BBB+ (Scope). A bank consortium consisting of Citi, Deutsche Bank and DZ Bank was mandated to place the bond. In addition, Deutsche Bank acted as the sustainability-linked structuring advisor.