Credit Ratings & Related Assessments
Economic & Fixed-Income Analysis
Analytics Consulting Services
Posted Date: December 7, 2021
MARC has accorded a Silver Impact Bond Assessment to SunREIT Unrated Bond Berhad’s (SUB) Sustainability-Linked Bonds (SLB) Framework which governs the terms of the SLB. SUB’s issuance of the first tranche of the SLB is part of Sunway Real Estate Investment Trust’s (Sunway REIT) maiden sustainable financing exercise and marks the culmination of Sunway REIT’s strategic collaboration with OCBC Bank (Malaysia) Berhad (OCBC Bank), which was, earlier this year, appointed as Sustainability Structuring Coordinator for SUB’s Unrated Medium-Term Notes Programme.
The SLB, structured in compliance with the International Capital Market Association’s Sustainability-Linked Bond Principles, features a pricing adjustment mechanism benchmarked against the achievement of predetermined Sustainability Performance Targets (SPT). The SPTs have been selected to measure the improvement in Sunway REIT’s sustainability goals, include sourcing a portion of its energy requirements from a renewable energy source and achieving and maintaining a minimum Building Energy Intensity (BEI) score for its retail properties portfolio.
MARC Group Chief Executive Officer, Datuk Jamaludin Nasir commented: “The linking of the issuer’s cost of funding to pre-agreed SPTs through the margin adjustments for the partial, full or non-achievement of the SPTs ensures tangible positive environmental impact and the closing of gaps between the SPTs and actual performance are incentivised. Apart from aligning with Sunway REIT’s broader sustainability objectives, these SPTs are relevant to supporting national and global decarbonisation goals”.
On the issuance of the SLB, the Chief Executive Officer of Sunway REIT Management Sdn Bhd, Dato’ Jeffrey Ng said: “Through this sustainable financing exercise, we are able to demonstrate a clear parallel between the achievement of our environmental, social and governance (ESG) targets and the optimisation of our financing cost. The success of this SLB issuance represents the next big step for Sunway REIT to integrate ESG practices at the heart of its financing strategy”.
Ms Tan Ai Chin, Managing Director, Senior Banker and Head of Investment Banking, OCBC Bank, said: “We are delighted to play a leading role in pushing the sustainable finance envelope yet again, by arranging the first ringgit-denominated sustainability-linked bond issuance by a publicly-listed entity. This solidifies the OCBC Group’s position as one of the principal advocates to accelerate sustainable finance development regionally.
The completion of this landmark transaction represents the first in a string of ESG-compliant funding transactions currently in our pipeline, following our signing of a Memorandum of Understanding with Bursa Malaysia last month to establish #financing4ESG. The initiative aims to proliferate interest in ESG adoption among public listed companies in Malaysia, in support of the government’s recently-announced PLC Transformation Programme”.
The successful SLB issuance by Sunway REIT represents a new milestone for sustainable finance in the Malaysian capital markets, in keeping with the Malaysian Government’s vision towards achieving carbon neutrality by 2050.
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