Chinese commodities trader Cofco International has closed a US$1.6bn sustainability-linked loan that includes margin savings based on the firm’s performance against environmental, social and governance targets.
The facility has been signed with a consortium of 19 banks and refinances revolving credit facilities (RCFs) from a similar deal struck three years ago, with a term loan under the 2019 agreement having already been refinanced last year.
The agreement consists of a 364-day tranche and a three-year tranche, and qualifies under the Loan Market Association’s sustainability-linked loan principles (SLLP), a voluntary set of guidelines published in 2019.
Agricultural Bank of China, ANZ, BBVA, Bank of China, China Construction Bank, ICBC, Natixis, OCBC Bank, SMBC and UOB are serving as bookrunning mandated lead arrangers (MLAs) on the transaction.
MLAs include Bank of Communications, DBS, ING and Westpac, while the list of lead arrangers consists of Bank of America, Crédit Agricole CIB, Deutsche Bank, HSBC and Standard Chartered.
On top of their other roles, BBVA, Bank of China and SMBC are serving as sustainability coordinators, while BBVA is the global coordinator, and documentation and facility agent.
Cofco says the deal is its third sustainability-linked loan and will see lenders provide financial incentives in the form of lower interest rates, should the trader achieve pre-agreed key performance indicator (KPI) sustainability targets.
These KPIs include its ESG management score, as measured by ratings agency Sustainalytics, as well as aims related to the traceability and socio-environmental screening of direct soy supplies from Brazil.
“A large part of the margin savings from the loan will go to finance activities that enable further traceability and responsible sourcing of critical commodities,” Cofco says.
“Another portion will help Cofco International advance its sustainability strategy and the rest will be invested in various landscape projects, where the company engages with suppliers, and in sector initiatives, working with peers on common sustainability goals.”
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