NAB arranges landmark sustainability-linked loan for Port of Newcastle
National Australia Bank has led the development of a landmark loan for Port of Newcastle that aligns financing for Australia’s largest east coast seaport with long-term environmentally and socially responsible outcomes.
The loan includes $515 million in sustainability-linked loans that reward the port by offering a lower margin on debt if it hits targets across a range of social and environmental metrics including emissions reduction, mental health first aid, diversity and inclusion.
This is the first sustainability-linked financing by an Australian seaport and the first such loan in Australia to include a modern slavery assessment metric addressing all of the borrower's suppliers.
Globally, this is the first sustainability-linked loan to align with the International Capital Market Association's Climate Transition Finance Handbook.
David Gall, NAB group executive of corporate and institutional banking said the sustainability-linked loan is an important step for the path Port of Newcastle is taking to be an even safer and more environmentally and socially responsible business. “Behaviour-based lending provides an opportunity to help our customers create greater environmental and social impact in sectors not easily diversified,” he added.
The sustainability-linked loan was part of a broader $666 million refinancing facility for the port funded by a consortium of lenders.
It includes $595 million in 2.5-year and 5-year funding and up to $50 million in new green lending that will fund growth initiatives aimed at green building projects and diversifying the port’s revenue base.
NAB acted as a core lender in the refinancing and assisted in the development of both a sustainability-linked financing framework and a green financing framework with the port.
Port of Newcastle chief executive, Craig Carmody said this loan had created a way for the port to align its financing with long-term environmentally and socially responsible projects. This will in turn help create a more diverse and sustainable port in the future, supporting opportunities for jobs and economic growth in the Hunter region,” he said.
According to the Institute of International Finance, the global sustainable debt market breached the US$2 trillion mark in the March quarter and is fast approaching $US3 trillion. With climate remaining the key theme within sustainable investing, carbon-intensive issuers appear to be opting for sustainability-linked bonds/ loans over transition bonds, which were specifically designed for firms with high greenhouse gas emissions looking to raise funds and to “green” their activities. Still, sustainability-linked bond/loan issuance reached US$11 billion in the March quarter which is equal to the total amount issued throughout 2019, said IIF.