Known worldwide by its initials, SLB, this is the first issue and placement of a corporate bond of this type in Argentina.
The bond, whose placement was led by Santander Argentina, was awarded for more than USD 50 million.
Through this instrument, San Miguel, a leading multinational in citrus fruits, commits itself to meeting a sustainability indicator: the supply of 66% of the electricity of the Famaillá Industrial Complex from renewable sources over a period of 12 months.
After coordinating the first green bond and the first sustainable bond in the local capital market, Santander underlines its commitment to the development of sustainable financial products by introducing the first SLB. The transaction serves to strengthen Santander’s leadership in the corporate bond market: in the first half of the year alone, it participated in 32 issues for more than ARS 122,000 million, representing 79% of the total market.
Buenos Aires, 2 September 2021 With sustainability as a priority in its operation, San Miguel, the leader in fruit production and marketing in the southern hemisphere, and Santander, the country's most important financial services platform, issued and placed respectively Argentina’s first Sustainability Linked Bond (SLB).
With this transaction, the two companies reaffirm their commitment to creating economic, social and environmental value for the communities in which they operate and for their customers.
The placement of the Sustainability Linked Bond was led by Santander Argentina and was awarded for USD 50,006,468.
Based on this instrument, San Miguel undertakes to achieve a 66% share for renewable energy in the total electricity consumption at the Famaillá Industrial Complex within 12 months from 30 September this year, generating an average saving of 6,300 tn CO2 per year.
This goal is part of the company's sustainability strategy, which includes an ambitious 10-year Climate Action Plan, the main objective of which is to reduce its carbon footprint, based on the use of renewable energy, the conservation of more than 6,000 hectares of native forest, which acts as a CO2 sink, and the Global Greenhouse Gas (GHG) Emissions Inventory, from which improvement and efficiency actions are identified and implemented. The company has incorporated renewable sources (wind) into its energy matrix since February 2020, and by the end of that year it exceeded the quota required by the Argentine Renewable Energy Law for 2025, 5 years in advance.
Santander is also reaffirming its commitment to sustainable investments, as this year it was also the placing agent of the first Sustainability Linked Bond issued on the local debt market (the use of the funds has both a green and a social impact). It is also consolidating its leadership in the segment: in the first half of the year alone, it participated in 32 issues for more than ARS 122,000 million, representing 79% of the total corporate bond market.
“We are proud to announce the first issue of this type of corporate bond in Argentina. Sustainability is an integral part of our production processes, the quality of our products, the link with our partners, customers, shareholders, suppliers and the communities to which we belong. From this milestone, we aim to deepen the positive impact of our operation through its forms of financing and to continue to nourish the long-term relationship with our stakeholders,” said Juan Massot, San Miguel’s Global Director of Strategy and Finance.
José Bandin, Head of Corporate and Investment Banking of Santander Argentina, stated that: “We are proud to accompany enterprises in their growth process, in the search for environmentally responsible financing alternatives.” He added: “In the first half of the year alone, our corporate debt transactions increased by 47% compared to the same period of the previous year, a figure that reflects the interest in this type of instrument.”
In line with the Sustainability Linked Bond Principles, FIX (Fitch's Argentine subsidiary) will provide independent verification of the framework (in terms of principles) for this type of bond. The fulfilment of the objectives will be verified annually, with a report from the independent auditor, Price Waterhouse Cooper, which will validate the results obtained under the Sustainable Objective. The Nicholson y Cano law firm provided legal advice to San Miguel throughout the process.
What is a Sustainability Linked Bond?
According to the International Capital Markets Association (ICMA), SLBs are bonds whose financial and/or structural characteristics can vary depending on whether the issuer achieves predefined Sustainability/ ESG objectives. Issuers are thereby committing explicitly to future improvements in sustainability outcome(s) within a predefined timeline.
Sustainability targets should be measurable through predefined Key Performance Indicators (KPIs) and assessed against predefined Sustainability Performance Targets (SPTs).
Ignacio Lorenzo, Head of Santander's Global Debt Financing, added that: “Santander has a huge responsibility and commitment in the transition to a low-carbon economy. This first SLB represents the natural progression in the development of sustainable financial products that we started almost 2 years ago with the issuance of Green and Sustainable Bonds. The SLB structure allows the issuer’s Environmental, Social and Corporate Governance (ESG) policies to be linked to a market instrument, opening a very attractive horizon of opportunities for other companies and investors in this transition process”.
About San Miguel
San Miguel is the leading company in the Southern Hemisphere in the production and distribution of fresh citrus fruits and processed foods from various origins (Argentina, Uruguay, South Africa and Peru) to supply customers in more than 80 countries. The company is constantly expanding its range, developing new products and adding value at each stage of the production process, with sustainability as a priority throughout its operation. For further information: www.sanmiguelglobal.com
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About Santander Argentina
Santander Argentina is the leading private entity in the Argentine financial system by volume of deposits. The bank has 400 traditional branches, 8 social integration branches, 3 digital branches, 3 Work Cafés, over 4 million customers (including 2.2 million digital customers, more than 320,000 MSMEs and 1,300 corporates). It has a team of more than 8,000 employees and a presence in 22 provinces and in the city of Buenos Aires. Santander Argentina also has an extensive responsible banking programme focusing on higher education, with over 90 collaboration agreements in place with Argentine public and private universities.
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