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Odfjell Tankers launches bond initiative tied to carbon cutting goals

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  • By Rig Lynx
  • Jan 08, 2021
  • Category : Archives
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Norway’s Odfjell, the parent company of the chemical tanker and terminal operator, is launching a debt financing using an innovative new bond instrument linked to the company’s ability to achieve its sustainability goals reducing the carbon intensity of its tanker operations. The innovative bond structure introduced to the capital markets in 2020 is designed to appeal to “green investors” by linking financing with encouraging companies to develop and meet sustainability goals. 

 

Odfjell said it would begin presentations to fixed income investors next week for a potential “sustainability-linked NOK denominated four-year senior unsecured bond.” The company is believed to be targeting raising at least $60 million with the potential for the offering to double depending on the appetite of green investors for the first shipping company to use this instrument. Proceeds from the bond issue will be used for general corporate purposes, including refinancing of existing bonds.

 

“The potential bond issue will be linked to Odfjell’s fleet transition plan and ambition to reduce the carbon intensity of its controlled fleet by 50% by 2030 compared to 2008 level,” the company said. 

 

Sustainability-linked loans are already commonplace, with the law firm Clifford Chance estimating that the market had already reached $122 billion by the end of 2019. In June 2020, the International Capital Market Association issued a voluntary set of guidelines designed to open the bond market to the growth seen in the sustainability loan market. Italy’s ENEL utility launched the first offering of this kind and in 2020 other well-known corporations, including Novartis and Channel launched sustainability-linked bonds. Odfjell would be the first shipping company to issue these instruments.

 

Source: Maritime Executive

 

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