Holcim issues the first Sustainability-Linked Bond in the Swiss franc market
Swiss-based leading building material manufacturer and sustainable finance pioneer, Holcim, has issued the first-ever Sustainability-Linked Bond in the Swiss franc (CHF) market. The CHF 425 million dual tranche offering was priced on January 12, 2022, and references the company’s CO2 emission-reduction targets. The transaction was proudly supported by Commerzbank as a joint bookrunner.
Holcim has long been committed to moving towards improved practices and limiting the environmental impact of its activities. The company is among the first to set 2050 net-zero targets validated by the Science Based Targets Initiative (SBTi) and has also committed to raising over 40% of financing in sustainable format by 2025. After coming to the market as one of the very first Sustainability-Linked Bond issuers in 2020 in EUR and again in 2021 in USD, Holcim updated their Sustainability-Linked Bond Framework in November 2021 to reflect their ongoing sustainability efforts and improvements.
On January 10, 2022, Holcim announced a new 4.75-year and 10-year dual tranche CHF Sustainability-Linked Bond offering. Following a two-day investor marketing exercise, the bonds were successfully priced on January 12, 2022.
The key element of the sustainability-linked structure is a premium payment payable to investors in the event the issuer does not achieve specific sustainability performance targets. In this instance, the targets include a 9.7 % and 17.5 % net reduction of Scope 1 CO2 emissions by December 2025 and December 2030 for the 4.75- and the 10-year tranches, respectively. Failure to achieve these targets triggers an additional 37.5 basis point or 75 basis point investor payout for the respective tranches. Such additional payments constitute an incentive for the issuer to implement sustainable practices in its operations.
“Reaching net-zero requires a tremendous financing effort. We are therefore delighted to have accompanied Holcim in this landmark transaction which broadens the Sustainability-Linked Bond market to the Swiss franc market,” says Mirko Gerhold, Head of Corporate Bond Origination & Solutions at Commerzbank.