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Capital Markets

Bond markets embrace social responsibility

Air Liquide attracts new investors; More deals to follow

Tanguy Claquin, head of the specialist sustainable banking team at Crédit Agricole CIB
Tanguy Claquin, head of the specialist sustainable banking team at Crédit Agricole CIBM

Last month Air Liquide became the first corporate bond issuer to offer a benchmark-size issue with a socially responsible investment rating provided by a third-party rating agency, Vigeo. Although the A-rated French company, a leader in provision of gases to industry and the healthcare sector, would have easily attracted strong investor demand for its €500 million nine-year issue, paying a 2.125% coupon, the social responsibility rating added an extra element of over-subscription. "There were some investors who would have invested anyway and who increased the size of their orders and some who might not otherwise have invested, since Air Liquide was not on their risk/return sweet spot," says Tanguy Claquin, head of the specialist sustainable banking team at Crédit Agricole CIB, arranger of the deal.

Proceeds will refinance the Gasmedi and LVL Médical acquisitions, two leading players in the home healthcare sector in Europe. It is Air Liquide’s commitment to environmental aspects of its care home management, including reducing carbon emissions and meeting independently monitored recycling targets, that have earned the socially responsible investment rating on the bonds.

"Socially responsible investment has been a big and fast-growing theme for a number of years in the equity markets where investors can exercise influence over companies’ activity. We now see a similar trend in bond markets," says Claquin. "There’s a very wide range of investors, including some of the largest asset managers and pension funds in Europe, especially the Nordic pension funds, strongly motivated to pursue socially responsible investment. This is an important way for companies to extend their investor base."

There is some scepticism among the promoters of green finance that companies will try to portray themselves as socially responsible on tenuous grounds. Independent rating firms are scattered across national markets and can at least provide some reassurance that there is more substance than marketing.

"Corporate issuers have to make a serious commitment to doing this and reporting on it and that includes senior management, financial staff and social responsibility teams," says Franck Hergault, managing director corporate debt origination France and Benelux at Crédit Agricole CIB. "We are having discussions with a number of French companies and while more deals using this format are unlikely before year-end, we’ll see more in the next six months."

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