PPC Plans Europe’s First Sustainability-Linked HY Bond

Public Power Corporation is planning to sell Europe’s first sustainability-linked high-yield bond this week, adding more weight to a fast-growing trend in the region’s loan market.

The company held investor calls on Monday and plans to conclude its meetings for a 500 million-euro ($594 million) planned bond sale on Wednesday. The new issue is expected to be rated B/BB- by S&P and Fitch.

Sustainability-linked debt sales have taken off in Europe’s leveraged loan market in recent months. Those deals included so-called margin ratchets which will see those companies pay less if they hit specific goals, or more if they miss their targets. PPC’s new bond carries a penalty only however, with a higher coupon of 50 basis points if it fails to reduce its CO2 emissions by 40% by December 2022 from 2019.

“The issuance aligns with our overall environmental strategy, which is to reduce our carbon footprint and mitigate the impacts of climate change,” a company spokesperson said in an emailed statement. “PPC’s environmental strategy is in line with the European Union’s and Greece’s medium and long-term objectives for climate neutrality by 2050.”

European investors have seen a glut of leveraged loan debt this year with pricing tied to how the company performs against sustainability-linked targets. At least eight such deals have priced in 2021 so far, including Kloeckner Pentaplast, Flender GmbH and Asda Group Ltd, up from three in all of 2020. Still, some investors are griping about how easily borrowers can achieve their targets.

HSBC, Goldman Sachs and Citibank are global coordinators on the PPC deal.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.