In January 2021, Milbank advised issuers and initial purchasers in three international sustainability-linked bond issuances out of Brazil.
Milbank advised initial purchasers in the $500 million issuance of 3.200% sustainability-linked notes due 2031 by Brazilian paper and pulp producer Klabin S.A., and dealer managers in a concurrent tender offer for any and all outstanding 5.250% notes due 2024, one year after advising initial purchasers in the company’s retap issuance of green bonds. The terms of these sustainability-linked notes provide for independent and cumulative interest rate step-ups if three sustainability targets related to water management, responsible forestry and biodiversity are not met in 2025.
Milbank also advised Brazilian logistics conglomerate Simpar S.A. in its $625 million issuance of 5.200% sustainability-linked notes due 2031 and concurrent tender offer for any and all outstanding 7.750% notes due 2024 and advised Simpar’s leading car rental and fleet management subsidiary Movida Participações S.A. in its inaugural international bond offering of $500 million in 5.250% sustainability-linked notes due 2031. The terms of each of these sustainability-linked notes series provide for an interest rate step-up if sustainability targets related to reduced greenhouse gas emissions, as measured in each case by three key performance indicators, are not met in 2025.
The Milbank team was led by Global Capital Markets partner Tobias Stirnberg, with associates Alexia Raad and Mateus Costa-Ribeiro, Tax partner Andrew Walker, with associates David Hanno and Samantha Rocco, and Alternative Investments partner Catherine Leef Martin.
Mr. Stirnberg said, “These deals represented great opportunities for the issuers to tap the highly liquid market for these types of transactions, with very attractive pricing terms. It appears to us that sustainability-linked bonds, which are fairly new to the Latin American markets, are here to stay. They provide an opportunity for issuers to access the international capital markets on favorable terms by formalizing sustainability goals. In addition, we expect that the sustainability-linked loan market will also continue to develop. We are glad to have participated in more than 50% of the sustainability-linked transactions out of Brazil in the first part of this year.”
In December, Milbank LLP advised FS Agrisolutions Indústria de Biocombustíveis Ltda. (FS Bioenergia), one of Brazil’s largest producers of ethanol and a market leader in the production of environmentally friendly biofuels (as well as a leading Brazilian producer of animal nutrition products made from corn), in its inaugural $550 million green bond offering of 144A/Reg S secured notes. The Milbank deal team was led by Global Capital Markets partners Marcelo Mottesi and Fabiana Sakai, with associates Bodie Stewart and Amanda Borges. The team also included Alternative Investments partner John Williams and associates Maya Grant, Nathaniel Bachelis, Elizabeth Martinez and Victoria Jones Yilmaz and Tax partner Andrew Walker.
Milbank recently advised on other sustainability-linked issuances in the region including the first-ever sustainability bond by a Latin America financial institution for Banco Continental and advising InterEnergy in the landmark first-time issuer Rule 144A green project bond financing by its portfolio wind and solar power generation companies UEP Penonomé S.A. as issuer.
