Pilgrim’s Pride Sells Record Sustainability-Linked Junk Bond

Pilgrim’s Pride Corp., one of the top U.S. chicken producers, sold $1 billion in bonds tied to environmental targets, the largest ever for the genre in the U.S. high-yield market as issuers come under pressure to be better corporate citizens.

The senior unsecured sustainability-linked bonds mature in 10 years, and the proceeds, together with cash on hand, will help refinance the company’s 5.75% bonds due in 2025, according to a statement Thursday. The new debt priced at a yield of 4.375%.

Sustainability-linked bonds, which can be used to fund just about anything provided the borrower pledges to hit a social or environmental target, are booming amid public concern about issues such as climate change. JBS, the world’s largest meat supplier and the owner of Pilgrim’s Pride, earlier this week committed to net-zero greenhouse gas emissions by 2040, which would mean investing more than $1 billion in incremental capital expenditures over the next decade to cut pollution.

The interest rate on Pilgrim’s new junk bond will increase by 25 basis points unless the company can prove by a certain date via an external verifier that sustainability performance has been satisfied, according to a person familiar with the details, who asked not to be identified as the details are private.

“These actions reinforce our company’s long-standing commitment to responsible environmental stewardship and sustainable food production,” Fabio Sandri, Pilgrim’s global chief executive officer, said in a statement Thursday.

The debt offering from the meat and poultry company tops the $900 million SLB issued by Level 3 Financing in January, making it the biggest sustainability-linked junk bond in the U.S. market, according to data compiled by Bloomberg.

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