30 March 2020
BNP Paribas has scooped the inaugural Loan structurer/arranger/coordinator of the year award, after it took a leading role in the rapidly accelerating sustainability-linked loans (SLLs) market.
SLLs are general corporate financing tools which have a sustainability-linked incentive mechanism attached to its credit margin, reducing interest rates for those firms that achieve specific sustainability targets. Unlike green, social and sustainability (GSS) bonds, they can be used for general corporate purposes, as opposed to specific projects.
During 2019, BNP Paribas was the top environmental, social and governance (ESG)-linked loan provider in the Europe, Middle East and Africa (EMEA) region by both number of deals and volume.
"The bank has supported SLLs for clients across a range of sectors and sizes, including large corporations and mid-caps," said BNP Paribas. "This has included structuring several innovative SLLs targeting greenhouse gas reduction, childcare, education and ESG ratings key performance indicators (KPIs)."
BNP Paribas arranged nearly 30 SLLs over the course of 2019. These included a €2 billion ($2.2 billion) loan for Belgian chemicals firm Solvay in January, $2.6 billion loan to US power utility NRG Energy in May, and €4 billion loan to German tyre-maker Continental in December.
Among these loans, BNP Paribas also worked on some innovative new additions to the SLL market.
In December, the French bank arranged the first SLL to a private equity firm. The €1.5 billion loan to French firm Eurazeo – secured from a pool of 13 banks – is linked to four KPIs, and refinanced a €1 billion lending facility. The first KPI is related to the management company, Eurazeo Capital, reducing carbon emissions as part of its target of becoming carbon neutral by 2024. The remaining KPIs are tied to the portfolio of companies owned by Eurazeo, including levels of ESG reporting and acceleration programmes.
BNP Paribas said the loan to Eurazeo – which manages €19 billion in assets and is listed in Paris – demonstrates that the "private equity industry is ready to accelerate sustainable finance in a feasible, impactful way".
In addition, BNP Paribas arranged the €250 million loan to Spanish telecommunications firm MásMóvil. Involving a €100 million revolving credit facility and €150 million capital expenditure line, the loan was the first to link an S&P ESG rating to the criteria. The loan includes a ratchet to the interest rate which will step up should MásMóvil's S&P ESG rating deteriorate, but step down should it improve.
Other major SLLs arranged by BNP Paribas in 2019 include a $1.19 billion loan to education firm Pearson in February, an AUD1.4 billion ($840 million) loan to Sydney Airport in May, and a €1.3 billion loan to French catering company Sodexo in September.