Time for charity donations as SLB penalty?

摘要

Bankers are working on a new structure for the sustainability-linked bond market in which the penalty for a corporate issuer that misses its KPI targets would be a charitable donation, according to sources. The donation would be instead of a step-up in coupon payments, which has become the most common form of penalty for SLBs, also known as KPI-linked bonds. Some investors are uncomfortable with the step-up feature because they don't want to be seen to benefit financially from an issuer's failings (and from the increased CO2 emissions, or other ESG deficiencies, that would result). Bankers say that there is at least one investment-grade company putting together a sustainability-linked bond incorporating a charitable donation as the penalty. "We're aware of that process," said a debt capital markets banker in London. "It's an issuer that's looking to innovate. The [SLB] market has shown that there's space for innovation."