Stockholm (NordSIP) – To help fund its efforts to decrease its CO2 emissions footprint, Loomis AB, one of the world’s leading companies in cash and valuables handling, issued SEK1.2 billion in Sustainability-Linked Bonds (SLBs) at the end of November.
Loomis, a Stockholm-based large-cap company with operations in more than 20 countries with roughly 400 branch offices worldwide and around 23,000 employees, provides solutions for the distribution, handling, storage and recycling of cash and other valuables. Loomis customers are banks, merchants and other operators.
The sustainability-linked bonds are issued under Loomis’ recently updated MTN program and under Loomis’ newly established Sustainability-Linked Financial Framework, which was published in November 2021.
Sustainalytics concludes, in its second opinion verification of the framework, that Loomis “objectives are ambitious and aligned with Loomis’ sustainability strategy.” In addition, the framework is in line with the principles of “Sustainability-Linked Bond Principles 2020” and “Sustainability-Linked Loan principles 2021”.
Strong Nordic Demand
The five-year bonds have a floating interest rate of 3-month Stibor plus 135 basis points (bps). The proceeds will be used for general corporate purposes and to refinance loans. The bonds will be listed on the Nasdaq Stockholm Sustainable Bond List.
The bond was priced at par and benefitted from strong demand from over 20 individuals Nordic investors, which pushed the spread to the middle of its initial 130-140bps guidance. Swedish investors represented 82% of the demand for this bond leaving another 14% for Norwegians and 4% for Finns. Sectorally, asset managers purchased 83% of the notes, leaving the remaining 15% to pensions and insurance companies and another 2% to other miscellaneous investors.
Nordea structured the Sustainability-Linked Financial Framework and Danske Bank and Nordea jointly acted as bookrunners for this issue.
The Step Up
SBLs are set in such a way as to create a financial incentive for the borrower to improve its sustainability profile on some pre-arranged metric. Should such improvement not be met, the cost of borrowing will go up at some pre-arranged date.
In Loomis’ case, the borrower has committed to reducing its operational (scope 1 and 2) CO2 emissions by 20% by the end of 2025 compared to the baseline year of 2019. Should such a commitment fail to be met, the redemption price will increase to 101%.