Deal: ASX-listed Wesfarmers has been assisted by Allen & Overy (A&O) in its issuance of $1 billion in sustainability-linked bonds, which marks both the first sustainability-linked bonds to be issued in Australian dollars within the Australian market and Wesfarmers’ first sustainability-linked note.

Value: $1 billion.

Area: Capital markets. 

Key players: The capital markets team was led by partner Karolina Popic who was assisted by lawyer Caitlin Lee. A&O’s tax team also assisted, comprising of partner Ka Sen Wong, counsel Angela Melick and senior associate Alice Morstyn.  

Deal significance: The interest rate on the bonds is directly linked to Wesfarmers’ performance against the level of utilisation of renewable energy in the group’s retail division and the reduction in CO2e emissions intensity in ammonium-nitrate production in Wesfarmers chemicals, energy and fertilisers division. 

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The bond issue consists of two tranches, $650 million seven-year unsecured, fixed-rate sustainability-linked bonds maturing in June 2028 and $350 million 10-year unsecured, fixed-rate sustainability-linked bonds maturing in June 2031. A step-up in the interest rate of 0.125 per cent per annum will apply in respect of each target that is not met. 

Ms Popic commented: “Wesfarmers’ issuance is a landmark transaction in the Australian market, being the first sustainability-linked bond issue denominated in Australian dollars. It is also emblematic of a trend towards large, industry-leading corporates favouring this kind of note issuance as a way to demonstrate their commitment to sustainability goals.”