Sembcorp Industries raises $ 496 million through sustainability bonds


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

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

The bonds will have a term of ten and a half years and a coupon rate of 2.66%. The bond’s interest rate will have a margin of 0.25% from the first interest payment date or after April 1, 2026, if the reduction in greenhouse gas emissions to 0.40 tonnes of carbon dioxide equivalent per MW or less is not reached by the end of 2025.

The net proceeds will be used to finance the general working capital needs of the company and its subsidiaries, refinance the group’s existing debt and / or finance or refinance its renewable energies or other sustainable projects.

The bond issuance aligns with its new Sembcorp sustainable financing framework. The framework describes its strategic approach, key performance indicators and sustainability performance targets for its sustainability 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 UK. It aims to quadruple its installed renewable capacity to 10 GW by 2025 against 2.6 GW in 2020.

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

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

Wong Kim Yin, Group President and CEO of Sembcorp Industries, said, “We are fully committed to transforming our portfolio from brown to green. The issuance of our first sustainable development bonds underlines this commitment. We are delighted that IFC has chosen our insurance to be its first investment in SLB globally. Their support validates our strategy and stimulates us in our approach to support 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 developed and emerging markets globally, but they should not be seen as mutually exclusive. With the success of this bond issue, investors have made their position on the climate crisis clear and have continued to move 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 portfolio of renewable energies.

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

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