Agrochemical Firm Seeks India’s First Sustainability-Linked Loan
UPL Ltd. launched the first dollar term loan with an interest margin that rises or falls based on ESG targets.
(Bloomberg) -- The recent trend of companies linking the cost of loans to sustainability and social-responsibility goals has arrived in India.
Agrochemical firm UPL Ltd. launched the first dollar term loan by an Indian borrower targeted at investors with an interest margin that rises or falls based on environmental, social and governance targets, according to data compiled by Bloomberg. Sustainability-linked borrowings offer access to lower-cost ethical funding, while avoiding some of the restrictions for use of proceeds found in green debt.
The company mandated MUFG and Rabobank to arrange a $500 million five-year sustainability-linked loan, which has been launched to syndication, according to people familiar with the matter who asked not to be identified. The deal offers an opening margin of 130 basis points over Libor and will give margin reductions if the company achieves certain ESG-linked key performance indicators, said the people.
UPL is looking for the loan to refinance existing higher-cost debt, the company said in an email. The deal will help UPL reduce the cost of borrowing as well as allow the company to engage with a new set of investors, it said.
The sustainability-linked loan market globally is having its busiest start to a year ever in 2021. Firms have borrowed $24.4 billion via such loans so far this year, nearly 50% more than for the comparable period in 2020, Bloomberg-compiled data show.
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