L&Q issues £300m bond with sustainability-linked targets
L&Q has completed the issuance of a £300m bond that is directly linked to the housing association achieving a number of sustainability-linked targets.
The 10-year bond, which L&Q said is the sector’s first sustainability-linked bond, will require the landlord to reduce Scope 1 and 2 greenhouse gas emissions by 20% and achieve an average Standard Assessment Procedure score of 72 or above across its stock.
L&Q must also build 8,000 new homes, of which 50% are to be affordable, in order to maintain a more favourable coupon.
The bond will mature on 31 March 2032 and is priced at gilts + 87 bps, giving a coupon of 2.00%.
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The coupon will be subject to a 12.5bps step-up if L&Q misses its targets.
Martin Watts, director of treasury at L&Q, said: “The [sustainability-linked bond] is priced at the lowest re-offer credit spread achieved by L&Q to date, and clearly demonstrates the positive reception received from investors despite competing supply and recent wider market volatility.”
Waqar Ahmed, group director of finance at L&Q, said: “We are thrilled with the successful placement of this landmark sustainability-linked bond, which is a first for our sector. It will allow us to meet our stated objectives and further strengthen our liquidity position, while stretching us to achieve environmental and social targets that greatly benefit our residents and the wider community.”
Agnes Gourc, head of sustainable capital markets at BNP Paribas, which advised on the transaction, said: “L&Q is proving that finance can be used to align social and environmental targets and drive real progress in a transparent, measurable way.
“L&Q’s communities’ benefit from new and affordable homes constructed with a lower environmental impact, and investors get a direct link between their investments and the SLB [sustainability-linked bond] commitments.”
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