Investec Bank has closed a sustainability-linked term loan, securing a US$600mn facility from 22 banks.
The South African lender will use the financing for corporate purposes and for refinancing a US$500mn syndicated term loan signed in November last year.
This year’s facility was significantly oversubscribed, having been launched at US$300mn. It has a tenor of two years and the option of a one-year extension.
It is the first sustainability-linked loan closed by Investec Bank Limited, the Investec group’s South African-licensed lender. Its UK banking arm, Investec Bank Plc, also closed a US$600mn syndicated term loan in July this year.
Investec’s global head of financial institutions Darryn Solomon tells GTR that to achieve cheaper financing under the sustainability-linked arrangement, the bank will not have specific targets such as those outlined in the Loan Market Associations’ (LMA) sustainability-linked loan principles, but instead has to improve its environmental, social and governance (ESG) risk rating as judged by Sustainalytics, an ESG corporate solutions provider.
Investec’s current risk rating is ‘low’, the second-best category, and Solomon says the bank has already improved its ranking from 20.2 to 16.6 so far this year and “are stretching ourselves even further” by committing to lowering it further.
If that target is not met, the margin on the loan increases by 2.5 basis points.
The facility is aligned with Investec group’s sustainable finance framework, which is based on the LMA principles, Solomon adds.
Abu Dhabi Commercial Bank, Bank of America, the London branch of China’s ICBC, SMBC, Standard Chartered and State Bank of India are coordinators, bookrunners and mandated lead arrangers (MLAs) on the facility.
The other MLAs are: the Export-Import Bank of China (China Exim), BNP Paribas, Canara Bank, China Construction Bank, Citibank’s Johannesburg branch, Commerzbank’s London branch, Credit Europe Bank, HSBC’s Johannesburg branch, JP Morgan Securities, Lloyds Bank Corporate Markets, Mizuho Corporate Bank, MUFG and the National Bank of Ras Al Khaimah.
Bank of China, Bank of Taiwan’s South Africa branch and China Exim are lead arrangers.
“The success of the deal highlights the international syndicated loan market’s continued support for Investec as the global markets continue to recover from the Covid-19 pandemic,” Investec says in a statement.
“Competitive pricing, the sustainability link and a return to a single 2+1 year tranche further demonstrates the appeal of the transaction to lenders.”
Earlier this year Investec launched a new trade finance team in Johannesburg as it seeks to strengthen its presence in Africa, where research suggests businesses are hobbled by difficulty in gaining access to trade financing.