NYK Line has signed two sustainability-linked loan agreements worth US$840M, aligned with the loan principles set forth by the Loan Market Association
The company signed a five-year loan worth US$204M from Iyo Bank, Bank of Saga, Shikoku Bank, Nomura Trust and Banking Co, Hachijuni Bank and MUFG Bank to fund its business. NYK has also signed up for a revolving credit facility of US$600M with Sumitomo Mitsui Banking Corp (SMBC) to act as a business fund. MUFG will act as the agent for both loans.
The objective of the loan is to promote and support environmentally and socially beneficial economic activities by linking corporate loan terms with mutually agreed sustainability performance targets consistent with a customer’s ESG strategy.
The lenders require NYK to maintain a high climate change disclosure score as assessed by non-profit organisation CDP. As long as high CDP ratings are achieved, the interest rate terms will remain unchanged until the repayment deadline.
In February, NYK announced its intention to further integrate ESG into the company’s management strategy and promote activities that contribute to achieving sustainable development goals by providing cleaner transportation services.
These two agreements bring NYK’s sustainability-linked loans to four. In 2019, NYK inked a US$450M revolving facility with Norinchukin Bank, Mizhuho Bank, SMBC and MUFG – the agreement was touted as Japan’s first sustainability-linked loan. The company was also awarded a US$50M four-year loan with Shiga Bank in February 2020.
The decade is poised to see a rise in green financing with more and more shipping companies turning to ESG investors to meet their liquidity requirements.
This year German shipping giant Hapag-Lloyd secured nearly US$1Bn in sustainable financing to help build six 23,500- TEU+, LNG-fuelled box ships while Singapore-based Sembcorp Marine clinched a sustainability-linked US$375M facility from DBS bank for its offshore business.
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