Budweiser APAC Inks One of Drink Sector’s Top Asia ESG Loans

Budweiser Brewing Co. APAC Ltd. has signed a sustainability-linked loan that would mark one of the largest deals of its kind for an Asia Pacific food and beverage maker.

The company announced the $500 million revolver with a group of lenders led by Bank of China Ltd. in a Monday statement. Interest rates on SLLs are based in part on environmental, social and governance targets. This is Budweiser APAC’s first SLL, according to Jan Clysner, the firm’s vice president of procurement and sustainability.

According to data compiled by Bloomberg going back to November 2017, the region’s largest such deal in the sector had been an $170 million loan last year by Thailand’s Mitr Phol Sugar Corp. Environmentally focused debt has become increasingly prevalent in Asia, as countries in the region seek to meet ambitious carbon neutrality goals. But SLLs remain relatively uncommon in the region because they take more work to structure and continually assess borrowers’ practices than other so-called ethical financing.

READ: China Green Debt Set for Explosive Growth, Top Arranger Says (1)

Budweiser APAC will be eligible for a lower rate on the loan if it meets key performance indicators for use of renewable energy, levels of carbon emissions during production, water efficiency and packaging, according to Clysner. A third party will assess the firm’s performance. Water efficiency will be the most challenging of the four metrics, he said, in part because of the timing of rain. The company’s focus on the issue will be India, where its breweries are in what the firm calls high-risk water areas.

The brewer’s deal puts this year’s value of sustainability-linked loans provided to Asia Pacific firms at $6.3 billion, exceeding the $5.2 billion recorded for the full year of 2020, according to Bloomberg-compiled data. Still, there remains a big gap for this type of debt to catch up with green loans, another format for ESG financing, which have come in at $10.5 billion for the region year to date.

©2021 Bloomberg L.P.

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