Netcare and Standard Bank launch Africa’s first sustainability-linked bond

The coupon rate of these bonds is linked to the issuer’s achievement of certain pre-agreed sustainability performance targets. In Netcare’s case, the group aims to reduce its energy consumption, procure more renewable energy, reduce total carbon emissions, and further improve its water efficiency, partly by increasing its capacity to recycle grey water. In addition, Netcare is developing systems to ultimately convert all infectious healthcare risk waste (HCRW) produced on-site to inert products and achieve zero waste to landfill for waste, outside the HCRW stream, by 2030.

Standard Bank acted as Sole Arranger and Sustainability Agent to execute on the continent’s debut sustainability-linked bond (NTCG01). The bond was listed on the interest rate market of the JSE on the 19th of March. Netcare raised a ZAR1 billion, 3-year, unsecured note priced at 5.4% (3 Month Jibar +175bps). If Netcare achieves its climate change mitigation and water efficiency targets linked to the bond, it will benefit from a step down in the coupon rate.

Along with other instruments, such as sustainability-linked loans, green bonds and social bonds, demand for sustainable finance solutions is rising fast in Africa.

Sustainability-linked corporate financing facilities offer clients an opportunity to directly fund green and social improvements, or to refinance existing general corporate funding with a solution that also delivers an indirect socio-economic benefit for the communities and environments in which they operate. Investor demand is partly being driven by the recognition that companies that operate in a sustainable manner tend to have lower risk profiles.