Singapore’s energy and urban development company Sembcorp Industries on June 2 priced its inaugural green bond offering amounting to S$400 million (US$303 million) to support its growing renewables portfolio.
The offering was competitively priced with more than 90% of the green bonds placed to institutional investors predominantly in Asia-Pacific and including some participation from Europe. The 10-year unrated deal was priced at par with a coupon of 2.45% – equivalent to a spread of 89.5bp over the Singapore dollar swap offer rate. It attracted an order book of over S$675 million from 37 accounts, with public sector institutions and banks being the biggest buyers with 69%, while funds and agencies took 28% and private banks 3%.
The bonds were issued through Sembcorp’s wholly-owned subsidiary Sembcorp Financial Services and drawn under its S$3 billion multi-currency debt issuance programme.
With the completion of this offering, Sembcorp will have successfully issued the first certified green bond under the Climate Bonds Standard by a Singapore-based energy company. Net proceeds arising from the issue will be used to finance or refinance, in whole or in part, new or existing projects which fall in the list of eligible green projects in the Sembcorp green financing framework and meet Climate Bonds Initiative (CBI) sector-specific technical criteria.
Launched in May 2021, the framework is aligned with the CBI’s Climate Bonds Standard v3.0. The Climate Bonds Standard v3.0 certification provides an assurance to investors that the issuer will use the proceeds from an issuance of green bonds to finance or refinance projects needed to deliver a low-carbon economy and that are consistent with the Paris Agreement’s long-term temperature goal.
Sembcorp group president and CEO Wong Kim Yin says Sembcorp has articulated its strategic vision to be a leading pan-Asian provider of sustainable solutions, and it is committed to the target of having 10 gigawatts (GW) of gross installed capacity by 2025. “The resounding support from investors for our inaugural green bond offering has given us strong confidence to drive firmly ahead with our strategy.”
Commenting on the deal, Sembcorp group CFO Eugene Cheng says tapping new sources of capital, including green financing, is a key thrust for Sembcorp as it repositions its portfolio and drive strategic green growth. He notes that the Climate Bond Standard certified green bonds demonstrate Sembcorp’s ability to access green sources of financing at competitive pricing levels. “We are committed to using the proceeds to contribute to a low-carbon economy,” he adds.
DBS and United Overseas Bank were the joint bookrunners and lead managers for the transaction, while OCBC Bank acted as the green finance adviser in the preparation of the green finance framework. EY has assured the green bonds’ conformance with pre-issuance requirements of the Climate Bonds Standard v3.0.
Sembcorp is one of the largest Singapore homegrown renewable energy players with more than 3,300 megawatts (MW) of renewable energy capacity globally. The company’s renewable energy portfolio comprises wind, solar and energy storage in key markets such as Singapore, Vietnam, China, India and the United Kingdom.
As part of its strategic plan to transform its portfolio from brown to green, the company articulated its aim to quadruple its gross installed renewable energy capacity from 2.6GW to 10GW. By 2025, Sembcorp also aims to reduce its greenhouse gas (GHG) emissions intensity by 25% to 0.40 tonnes of carbon dioxide equivalent per MW hour. The company has likewise committed to bold climate action to halve its GHG emissions by 2030 and deliver net-zero emissions by 2050.