Singapore-based renewable energy company Sembcorp Industries has raised S$675 million (~$496.1 million) by launching a sustainability-linked bond (SLB) in Singapore.

The company’s wholly-owned subsidiary, Sembcorp Financial Services, priced its inaugural bond. International Finance Corporation (IFC) anchored the bond issuance with an investment of $150 million.

The bonds will have a tenor of ten-and-a-half years and a coupon rate of 2.66%. The bond’s interest rate will have a step-up margin of 0.25% from the first interest payment date or after April 1, 2026, if greenhouse gas emission reduction to 0.40 tons of carbon dioxide equivalent per MW or lower is not achieved by the end of 2025.

The net proceeds will be utilized to finance general corporate working capital requirements for the company and its subsidiaries, refinancing the group’s existing debt and/or financing or refinancing its renewable energy or other sustainable projects.

The bond issuance aligns with its newly established Sembcorp Sustainable Financing Framework. The framework outlines its strategic approach, key performance indicators, and sustainability performance targets for its sustainability-linked transactions.

Sembcorp has over 3.3 GW of renewable energy capacity, including solar, wind, and energy storage solutions in Singapore, China, India, Vietnam, and the United Kingdom. It aims to quadruple its installed renewable capacity to 10 GW by 2025 from 2.6 GW in 2020.

The investment from IFC aligns with the World Bank Group’s Climate Change Action Plan. Under this plan, IFC has committed to aligning all new real sector operations with the objectives of the Paris Agreement by July 1, 2025. It has also set a target of 35% financing for climate on average over the next five years.

For the issuance and the offering of sustainability-linked bonds, DBS Bank and United Overseas Bank acted as joint lead managers and bookrunners.

Wong Kim Yin, Group President and Chief Executive Officer of Sembcorp Industries, said, “We are fully committed to transforming our portfolio from brown to green. The issuance of our inaugural sustainability-linked bonds underscores this commitment. We are heartened that IFC has chosen our insurance to be its first investment in SLB globally. Their support validates our strategy and spurs us on in our drive towards supporting the global energy transition and a low-carbon economy.”

Alfonso Garcia Mora, IFC Vice President for Asia and the Pacific, said, “Sustainable growth, decarbonization, and energy security are key themes for both developed and emerging markets globally, but they should not be seen as mutually exclusive. With the success of this bond issuance, investors have made their position on the climate crisis very clear and continuing to shift capital to align their portfolios with net-zero targets.”

In June 2021, Sembcorp Industries announced the successful pricing of its inaugural S$400 million (~$301.9 million) green bond offering to support its growing renewables portfolio.

Mercom had earlier reported that DBS Bank provided a S$40 million (~$29.29 million) loan to Sembcorp Industries to build one of the world’s largest floating solar projects on the Tengeh Reservoir in Tuas, Singapore.