All proceeds from the offering will help finance or refinance green assets, a source said. — Bloomberg
COPENHAGEN: Shipping giant A.P. Moller-Maersk A/S borrowed US$750mil in its first dollar-denominated green bond sale, the latest company to test investor appetite in a market challenged by political pressure.
The Copenhagen-based company sold bonds maturing in 10 years, according to a person with knowledge of the matter.
The notes will yield 1.65 percentage points above treasuries, after initial discussions of around 1.9 percentage points, said the person, who asked not to be identified as the details are private.
All proceeds from the offering will help finance or refinance green assets, which may include fixed assets, capital and operating expenses, as well as acquisitions of firms that derive at least 90% of their revenue from activities such as clean transportation and green buildings, said the person.
Maersk declined to comment.
The company’s spreads, or the added premium over US treasuries investors get paid to hold riskier debt, could come under pressure from subdued demand for container shipping services amid lower disposable incomes and recession headwinds, Bloomberg Intelligence credit analyst Stephane Kovatchev wrote in a note on Monday.
“Maersk’s new green bond faces gray industry clouds,” wrote the analyst. “That said, the Danish company’s negative net debt position and management’s commitment to investment grade ratings remain key pillars for its credit story in the near term.”
The company issued its first green bond in November 2021, raising 500 million euros with a 10-year note. The company at the time said the proceeds would be used to finance the planned purchase of eight methanol-powered vessels.
A push to decarbonise the shipping sector, which has long depended on carbon-intensive heavy fuel oil, is gaining momentum but still has a long way to go, according to analysts at BloombergNEF.
Container lines, including Maersk, are ordering more methanol-fuelled ships, indicating green methanol is their low-carbon fuel of choice, the analysts wrote in a note last month.
“It’s now all hands on deck as the sector searches for a fuel that can help it clean up its act,” wrote the analysts.
Maersk’s debt deal serves as a test of investor demand in the United States, where sales of sustainable bonds have plunged amid a political backlash against investments tied to environmental, social and governance (ESG) goals. Money managers are scrutinising ESG-related financing instruments more heavily due to concerns that companies might be overstating the benefits of the bonds.
As a result, companies are issuing fewer green bonds denominated in dollars.
Corporations have raised about US$32bil in dollar-denominated ESG bonds this year through Sept 11, a 53% slump compared with the same period last year, according to data compiled by Bloomberg.
Maersk is working to reduce its greenhouse gas emissions to net-zero by 2040, a decade earlier than its initial 2050 ambition, the company said in January 2022.
Its 2030 targets include a reduction of half in emissions per container transported by the Maersk Ocean fleet and a 70% reduction in absolute emissions from fully controlled terminals, said the statement.
Barclays Plc, Citigroup Inc, HSBC Holdings Plc, JPMorgan Chase and Co and Morgan Stanley managed the bond sale, the person said. — Bloomberg
