Sustainability bond of the year - corporate - Sun Life

Channels: Green Bonds

Melissa KennedyIn August, Canada’s Sun Life became the first life insurance company globally to issue a sustainability bond. The CAD750 million 10-year offering attracted strong investor demand despite carrying a lower coupon than the company’s other subordinated debt.

Most of the buyers were based in Canada and about two-thirds of them had specific sustainability mandates, she added. Asset managers were allocated more than two thirds of the offering, pension funds about 15% and insurance companies about 5%.

This inaugural transaction was intended to underline the company’s declaration that sustainability “is central to our business strategy”.

Deal highlights:

Issuer: Sun Life Financial
Date of issue: 13 August 2019
Size: CAD750 million ($567 million)
Maturity: 13 August 2029
Coupon: 2.38%
Use of proceeds: Eligible social investments focus on access to essential services, facilities and equipment that contribute to the long-term health of communities, such as infrastructure investments for hospitals or childcare centres. Other eligible assets include projects related to renewable energy, energy efficiency, green buildings, clean transportation and sustainable water management.
External review: Sustainalytics
Principles/Guidelines: Sustainability Bond Guidelines 2018
Lead managers: CIBC, HSBC, RBC Capital Markets
Credit rating: A (S&P); A(low) (DBRS)

An amount equivalent to the proceeds will be used to finance or refinance eligible social and/or green projects as defined in the company’s Sustainability Bond Framework. (See Table). External review company Sustainalytics described the framework as robust and transparent and said it aligns with the four core components of the Green Bond Principles 2018 and the Social Bond Principles 2018, as well as the Sustainability Bond Guidelines 2018.

“This issuance demonstrates our commitment to embed sustainability into our business while contributing positively to society and advancing technologies that enable a healthier future," said Melissa Kennedy, the insurer’s chief legal officer and executive sponsor of sustainability.

Sustainalytics agreed. “Sun Life’s sustainability strategy and actions demonstrate the importance the company places on achieving positive environmental and social impacts,” it said.