IFR 03.7.2020

International Financing Review March 7 2020 9

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Adani Abbot eyes

second Yankee

„ Bonds Aussie coal-port operator looks to US bond market

BY JOHN WEAVERS

4HEûOPERATORûOFû!USTRALIASû

controversial Abbot Point coal

port is looking to write the next

chapter in its colourful

FUNDRAISINGûHISTORYûWITHûPLANSû

FORûAûlVEûORûSEVEN

YEARû53ûDOLLARû

144A/Reg S senior secured bond

issue.

ADANI ABBOT POINT TERMINAL

mandated a unique quartet of

LEADûMANAGERSûnûStifel, Emirates

NBD Capital, Haitong and CLSAûnû

to arrange investor meetings

and calls last week in the Middle

East, Asia, Europe and the US

ahead of its second public

Yankee offering.

4HEûPORTûOPERATORûPAIDûAûHEFTYû

premium of around 100bp versus

its Aussie and Indian peers for a

DEBUTû53MûûlVE

YEARû

144A/Reg S senior secured print in

$ECEMBERûûTHATûFAILEDûTOû

move on from attractive Treasuries

plus 245bp area initial guidance.

,IKEûTHEûLATESTûTRADEû!!04Sû

MAIDENûFOREIGNûCURRENCYûBONDû

SALEûARRANGEDûBYû3TIFELû(AITONGû

and Investec, was marketed as

an investment-grade offering,

RATEDû"""n"""nû30&ITCH  û

thanks to the secured structure.

(OWEVERû-OODYSûSEESûTHEû

issuer as a sub-investment grade

CREDITûHAVINGûDOWNGRADEDûITûBYû

two notches to Ba2 in March 2016

nûAûPOINTûNOTûLOSTûONû53ûINVESTORS

DOMESTIC BOYCOTT

!!04ûPREVIOUSLYûFAILEDûTOûMAKEûANû

offshore bond issue in 2014, having

held roadshows in Singapore and

Switzerland, but did manage to

RAISEû!Mû53M   ûFROMûANû

UNDER

THE

RADARûûSEVEN

YEARû

%UROBONDûOFFERINGûINû*UNEû

This Australian dollar Reg S note

issue, along with the US$500m

December 2025s printed six month

EARLIERûLARGELYûREPAIDûTHEû

COMPANYSû53MûOFûSENIORûDEBTû

THATûMATUREDûINû.OVEMBERû

The local institutional market

REMAINSûEFFECTIVELYûCLOSEDûTOû

Adani Abbot after an initial

!MûlVE

YEARûDEALûINû

November 2013 that was

SHUNNEDûBYûSEVERALûLOCALûFUNDS

4HEûCOMPANYûFOLLOWEDûUPû

WITHûAû!MûSIX

YEARûSENIORû

SECUREDûNOTEûISSUEûINû-AYûû

that was targeted at private

INVESTORSûANDûPLACEDûBYû&))'û

3ECURITIESû!USTRALIASûLARGESTû

SPECIALISTûlXED

INCOMEûBROKER

!!04ûISûPARTûOFû)NDIASû!DANIû

Group, which has faced huge

environmental opposition in

Australia over its controversial

A$16.5bn Carmichael coal mine

in Queensland and a request for

AûNEARû!BNûTAXPAYERûLOANûTOû

BUILDûAûRAILWAYûLINEûTOûTHEû!BBOTû

Point coal port.

Negative headlines continue

to blight the Carmichael coal

project and its Indian owners,

WITHû!DANIûSUFFERINGûITSûlRSTû

Australian criminal conviction

last month for giving the

Queensland government false or

misleading information about

land clearing.

The offence prompted Green

PARTYûCALLSûFORûTHEûFEDERALû

government to revoke its

approval of the coal mine.

In the face of vociferous and

DETERMINEDûLOCALûLOBBYINGû

Australian investment banks and

leading international banks

active Down Under have

shunned the issuer, fearing

reputational risks from being

ASSOCIATINGûWITHû!DANIû'ROUPSû

coal-producing projects.

It also no longer has access to

!USTRALIASûTRADITIONALLYû

CONSERVATIVEûANDûINCREASINGLYû

ENVIRONMENTALLY

AWAREû

institutional investor base, in

benchmark size at least.

It has not all been bad news

FORû!!04ûHOWEVERûESPECIALLYû

for holders of its outstanding US

dollar December 2022s.

!FTERûSLUMPINGûBELOWûûINû

EARLYûûTHEûBONDSûHADûRALLIEDû

TOûûONûTHEûBID

SIDEûBYûLASTû

7EDNESDAYûANDûAûYIELDûOFûû

LARGELYûINûRESPONSEûTOûTHEû

surprise re-election of the coal-

FRIENDLYûCOALITIONûGOVERNMENTûINû

-AYûLASTûYEARû„

h7EûHAVEûSEENûANûINCREASINGû

demand for green and

environmental products and

given how much investment we

are aiming to do in electric

vehicles we want to attract new

investors, those committed to

%3'û)TûISûALSOûAûGOODûWAYûTOûLINKû

OURûlNANCINGûSTRATEGYûWITHû

these environmental goals.”

CLIMATE GOALS

The automaker has selected

ING and Societe Generale to

organise a series of investor

calls to present its

SUSTAINABILITYûSTRATEGYûASûWELLû

ASûITSûGREENûlNANCEûFRAMEWORKû

published on March 5.

h4HEû6OLKSWAGENû'ROUPû

believes that green debt

instruments are effective tools

to channel investments to

projects that have demonstrated

CLIMATEûBENElTSûANDûTHEREBYû

contribute to the achievement

of the Paris Climate Agreement

ANDûTHEû5NITEDû.ATIONSû

Sustainable Development

'OALSvûTHEûCOMPANYûSAIDûINûITSû

framework.

6OLKSWAGENûINûûBECAMEû

THEûlRSTûAUTOMAKERûTOûCOMMITû

to the Paris climate goals.

4HEûCOMPANYûRETURNEDûTOû

THEûPRIMARYûEUROûBONDûMARKETû

TWOûYEARSûAFTERûTHEûSCANDALû

WHENûITûSOLDûAûõBNûMULTI

tranche deal.

67ûWILLûNOTûBEûTHEûlRSTû

automaker to print green bonds.

4OYOTAû-OTORû#REDITûPRICEDûANû

unsecured US dollar green bond

last month, the proceeds of

which will be used to purchase

new retail instalment sales

contracts and leases for the

lNANCINGûOFû4OYOTASûLINEûOFû

HYBRIDûANDûELECTRICûCARS

0ORSCHEûLASTûYEARûISSUEDûWHATû

at the time was the largest

green Schuldschein, to help

lNANCEûTHEûMANUFACTUREûOFûTHEû

ELECTRICû4AYCANûMODELû4HEûõBNû

DEALûCAMEûINûTRANCHESûOFûlVEû

SEVENûANDûûYEARS

Additional reporting by Robert

Hogg „

This can range from including

ESG factors when onboarding

high net-worth clients, to

QUESTIONINGûTRADEûlNANCEû

COUNTERPARTIESûCLOSELYûANDû

ASKINGûDIFlCULTûQUESTIONSûABOUTû

underwriting.

h7EûALSOûREALISEûTHATûHUMANû

rights considerations or

assessments are neglected in

lending and underwriting, and

are asking banks to consider

this more,” Roth said.

Top funds are raising ESG

with banks in relationship

review meetings and sending

FOCUSEDûSUSTAINABILITYûSURVEYSûTOû

the sales and trading desks

TOUTINGûFORûBUSINESSûASûTHEYû

TARGETûSYSTEMICûCHANGE

h7EVEûHADûSOMEûOFûOURû

larger fund manager

counterparties be explicit with

USûANDûSAYûTHATûIFûWEûDONTûMEETû

ESG scores and criteria, we will

not be able to quote on trades,”

a senior banker said.

BMO uses its business with

its bank counterparties in its

,IABILITYû$RIVENû)NVESTMENTû

"USINESSûANDûITSûEQUITYûANDû

bondholdings in fund

products to drive change

through its engagement

team. Federated Hermes

interacts via its funds and

through its EOS team.

h!ûSMALLûNUMBERûOFûOTHERû

fund managers are doing what

BMO is doing. Fund managers

have a large portfolio of

products and understand the

LEVERAGEûTHATûlNANCIALû

institutions can have in other

industries,” Roth said.

)NVESTORSûAREûlNDINGûTHATû

while banks are good at

MEASURINGûCOMPANIESûCLIMATEû

RISKûTHEYûAREûNOTûCHECKINGûTHEû

ESG credentials and lending

policies of peers and

counterparties when making

lending and underwriting

decisions.

!LTHOUGHûTHEûANALYSISûISû

DAUNTINGûnûITûTOOKû.ATIXISûTWOû

YEARSûTOûCOLOURûCODEûITSûBALANCEû

SHEETûANDûTHEûBANKûCURRENTLYû

codes all business apart from

lNANCIALûINSTITUTIONSûDUEûTOû

THEIRûCOMPLEXITYûnûTHEûISSUEûISû

NOTûGOINGûAWAY

h4HEûWORLDûOFûCREDITû

engagement will change

QUICKLYûTHEREûWILLûBEûMUCHû

MOREûOFûITvûSAIDû!ARONû(AYûLEADû

ENGAGERûlXEDûINCOMEûFORû

Federated Hermes. (^) „
4 IFR Top news 2323 .p 4 - 14 .indd 9 06 / 03 / 2020 19 : 26 : 35