A.P. Moller – Maersk completed its first so-called “green bond” offering and in doing so set records in the financial markets both for itself and for the increasingly popular financing instruments tied to environmental projects. While other shipping companies, including Hapag-Lloyd, have also turned to the green market in the past year, Maersk’s offering was well-timed to catch investors’ interest and lay the groundwork for additional similar financing offers in the future.
The parent of the world’s largest container shipping line successfully placed its inaugural 10-year green bond raising $564 million that will be used to fund the construction by 2023 and 2024 of its first methanol-fueled feeder vessel and eight larger ocean-going container vessels that will also be capable of operating on methanol. Maersk reported that the transaction received a strong reception from the broad investor universe making it several times oversubscribed with a final order book of €3.7 billion (nearly $4.2 billion). The transaction also priced the coupon of 0.75 percent (interest rate), the lowest coupon ever for Maersk.
Bloomberg is reported that the offering “drew more interest than any other in Europe’s credit market this week.” It was the first time in three years that Maersk used the euro market for debt financing and comes at a time when Maersk is recording record profits. The company recently reconfirmed its September forecast for full-year earnings before interest and taxes in the range of $22 to $23 billion and free cash flow from operations above $14.5 billion. Maersk is on track in 2021 to achieve the largest profit ever reported by a Danish company.
Maersk said that this offering was the first under its newly developed Green Finance Framework designed to allow the company to issue a variety of sustainable financing instruments that may include in the future additional bonds, loans, project finance, and other instruments. By establishing the new Green Finance Framework, Maersk reports that it intends to align its funding strategy with its goal to become carbon neutral by 2050.
“Issuing Green Financing Instruments is a further step to integrating sustainability into our financing operations as it is an effective tool for channeling investments to projects with positive environmental impact,” said Patrick Jany, CFO for A.P. Moller – Maersk. “With this green bond, we aim at diversifying our investor base by reaching out to new investors and increasing the transparency of our ESG ambitions and performance even further towards our stakeholders.”
Green bonds or financing is linked to environmental operational targets defined by the issuer and independently verified. Cicero Green was appointed to review and verify Maersk´s Green Finance Framework. Based on the overall assessment of the eligible green assets under this framework and governance and transparency considerations, Maersk’s Green Finance Framework received a Cicero Medium Green shading and a governance score of excellent.