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New World Development priced Sustainability-Linked Bond
Finance Mandarin Real Estate ESG case: As part of its ongoing commitment to ESG integration, New World Development Company Limitedhas become the first real estate developer in the world to price a USD Sustainability-Linked Bond (SLB).
The SLB was oversubscribed by 6 times at its peak, with strong participation from international ESG investors (~80%) including renowned fund managers, asset managers and insurance companies across Asia and Europe.
This deal was priced at T+275 basis points, implying negative 5 basis points new issue premium, and it also achieved the lowest yield yet for a public USD-denominated bond offering by NWD.
The 10-year USD200 million bond (coupon rate: 3.75%) has a Sustainability Performance Target that is aligned to the Company’s latest “Renewable Energy Roadmap” , which commits to achieving 100% Renewable Energy for NWD’s Greater Bay Area rental properties by Financial Year (FY) end 2025/26.
The performance against the target, which will be reviewed by a third-party assurance provider, will be reported in NWD’s Annual Report until the SLB matures in 2031. Should NWD fail to achieve the target, it will purchase carbon offsets in an equivalent amount to 25 basis points per annum from 2027 until the SLB matures. The proceeds of the SLB will be allocated to NWD’s long-term sustainability initiatives, as well as general corporate purposes.
Echoing the commitment of “New World Sustainability Vision 2030” [4] to reduce 50% carbon emissions intensity across diversified businesses, the “Renewable Energy Roadmap” and the SLB's target will further reduce Scope 2 emissions (indirect greenhouse gas emissions from energy consumption) in NWD’s rental properties.
Dedicated to promoting green buildings in the GBA, the Company issued Hong Kong’s first green loan and a green bond via its wholly owned subsidiary New World China Land in 2018. In 2019, NWD secured a HKD1 billion sustainability-linked loan and, in 2020, executed Hong Kong’s first interest rate swap linked to the United Nations Sustainable Development Goals.
The banks involved in this transaction were J.P. Morgan and UBS, as Joint Global Coordinators, Joint Bookrunners and Joint Structuring Agents.
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