The increasing importance of sustainability in the aviation sector has been highlighted by Sydney Airport making the first ESG-linked issuance into the three-decade old US Private Placement (USPP) market.
MUFG, acted as joint lead placement agent and ESG structuring agent, on February 13, when it priced what the lender said was the world’s first ESG-linked issuance with two-way pricing and the world’s first ESG-linked USPP issuance for Sydney, Australia’s largest airport.
In a statement MUFG said that 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, also 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.”
MUFG said that Sydney Airport has now priced a highly successful A$600m 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 and leading specialised investment research and ratings provider.
As a part of its Sustainable Development Goals, MUFG is aiming to provide a cumulative total of 20 trillion yen (~A$270 billion) in Sustainable Finance between FY19 and FY30 to help build a sustainable society through the provision of financial services to its clients.