Wesfarmers will aim to increase the use of renewable energy in its retail divisions and cut emissions through the ASX-giant’s first sustainability-linked bonds in the Australian market.
The Perth-based conglomerate, whose business portfolio includes Bunnings, Kmart, Coles and Officeworks, is to raise AUD$1 billion following the successful pricing this week of:
- AU$650 million of seven year unsecured fixed rate Sustainability-Linked Bonds maturing in June 2028, with an interest rate of 1.94 per cent
- AU$350 million of ten year unsecured fixed rate Sustainability-Linked Bonds maturing in June 2031, with an interest rate of 2.55 per cent
Wesfarmers has grown into one of Australia’s largest listed companies with business operations covering home improvement and outdoor living; apparel and general merchandise; office supplies; chemicals, energy and fertilisers, and industrial and safety products.
Chief Financial Officer Anthony Gianotti said that Wesfarmers’ first such bond issue was oversubscribed by approximately 2.5 times.
“It is pleasing that in pricing this issue the market has recognised both the strength of the Wesfarmers businesses and the significance of the Group’s sustainability priorities in supporting long-term value creation,” Mr Gianotti said.
“The bond issue supports the group’s strategy to pre-fund upcoming bond maturities, ensure appropriate balance sheet flexibility and maintain a presence in key credit markets.”
Wesfarmers Bonds: Focus On Sustainability
The interest rates on the Sustainability-Linked Bonds are linked to Wesfarmers’ progress against two sustainability performance targets.
The performance targets relate to increasing the use of renewable energy in the Group’s retail divisions and reducing the CO2e emissions intensity of ammonium nitrate production in the Wesfarmers Chemicals, Energy and Fertilisers division.
The proceeds will be applied to general corporate purposes, including the refinancing of upcoming bond maturities in October 2021 and August 2022.
The joint lead managers for the Wesfarmers bonds issue were Australia and New Zealand Banking Group, BNP Paribas, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corporation.
The joint sustainability coordinators were Australia and New Zealand Banking Group, BNP Paribas and Westpac Banking Corporation.
Settlement of Wesfarmers bonds transaction is expected to occur on 23 June 2021.
Wesfarmers is rated A3/Stable/P2 by Moody’s and A-/Stable/A-2 by Standard & Poor’s.