Air France-KLM has announced the successful issuance of its inaugural sustainability-linked bonds, for a total aggregate amount of €1.0bn
The offering is composed of two tranches: a €500 million with a 3.3-year maturity and a coupon of 7.250%; and a €500 million with a 5.3-year maturity and a coupon of 8.125%. The bonds are linked to Air France-KLM’s target to reduce its well-to-wake scope 1 and 3 jet fuel greenhouse gas (GHG) emissions per revenue tonne kilometer (RTK) by 10% by 2025, compared to a 2019 baseline, as part of its 2030 SBTi approved objective.
The offer is reported to have attracted strong investor interest, with an orderbook around €2.6bn, covering c. 2.6x the size of the bonds.
The proceeds of the bonds will be allocated to partially redeem the outstanding bank loan guaranteed by the French State issued in May 2020. The company stated that this transaction was aligned with its “determination to actively pursue the redemption of the French State support package and the granted liquidity measures, in combination with its recovery path and sustainability ambition”.
Air France–KLM Group noted that this transaction will contribute to improving the group’s financial flexibility through debt reprofiling and will provide additional support to its decarbonisation trajectory.
The transaction will smoothen Air France-KLM’s debt redemption profile over the coming years and provide additional leeway for the company to deliver on its sustainable transformation plan, including the renewal of its fleet.
This transaction issuance is framed into the newly set Air France-KLM's Sustainability-Linked Financing Framework, aligned with the Sustainability-Linked Bond Principles (SLBP) published by the ICMA in June 2020, and received a Second Party Opinion from Moody’s Investors Services with a qualification of “Significant contribution to Sustainability”.
The transaction represents the first public sustainability-linked bond issuance in euros in the airline sector.
An application will be made for the bonds to be admitted to trading on Euronext Paris.
Natixis acted as sole sustainability structuring advisor and Deutsche Bank, HSBC, Natixis, Société Générale and Crédit Agricole CIB acted as joint bookrunners of the transaction.