trending Market Intelligence /marketintelligence/en/news-insights/trending/T50laBi-4dsSukOd4pElYg2 content esgSubNav
In This List

MásMóvil's leveraged loan 1st in Europe to include ESG rating, sources say

Blog

Global 5G Survey: Operators push past COVID-19 to accelerate 5G network upgrades

Blog

Banking Essentials Newsletter 2021: December Edition

Blog

Avoid Unwanted Counterparty Risk Exposure: Five Steps to Take in 2022

Blog

Investment Banking Essentials Newsletter 2021: December Edition


MásMóvil's leveraged loan 1st in Europe to include ESG rating, sources say

MASMOVIL Group has become the first leveraged loan borrower in Europe to include an environmental, social and governance component to a leverage loan package, according to banking sources.

As part of a €1.7 billion financing package, the company's €100 million revolving credit facility and €150 million capital-expenditure line sitting alongside a €1.45 billion seven-year term loan B, or TLB, will include an ESG rating from a third-party provider. The loans launched for syndication in early May to refinance existing debt.

MásMóvil is looking to align its financial growth targets with ESG criteria, the sources told LCD News, an offering of S&P Global Market Intelligence. ESG areas of coverage for a telco company typically include privacy and data security, labor management, corporate governance, carbon emissions, access to communications, and corruption and instability, the sources said.

Both the revolving credit facility and capex line will include a ratchet on the loans' interest that either increases if the ESG rating deteriorates or decreases if the rating improves.

Banks and institutional loan investors are increasingly interested in how borrowers are using ESG factors in financing. "Investment committees have started to focus a lot more on ESG topics. There is generally more Q&A and requests for transparency," said one source.

While the MásMóvil transaction marks the first European ESG-rated leveraged loan package in Europe, the global issuance of social and sustainability bonds continues to accelerate — totaling $13.4 billion globally in the first quarter of 2019, eclipsing the previous quarterly record of $10.2 billion in the third quarter of 2018, according to a Moody's report. Issuance of green bonds is also at a record high level globally, the report said, at $47.2 billion in the first quarter, marking a 40% increase from the first quarter of 2018.

Collateralized loan obligations too are starting to include ESG criteria. Fair Oaks is currently working on an ESG-compliant fund, following the issuance of ESG deals from Bardin Hill in April and Permira Debt Managers in 2018.

In March, the Loan Market Association, the Asia Pacific Loan Market Association along with the Loan Syndications and Trading Association published their Sustainability Linked Loan Principles to incentivize borrowers to define and report sustainability performance targets.

"We expect ESG-linked loans to grow in popularity following the publication of these guidelines," Moody's said in its report.

Last month, S&P Global Ratings launched its ESG evaluation, a new benchmark that provides a cross-sector analysis of an entity's capacity to operate successfully in the future, and is grounded in how ESG factors could affect stakeholders and potentially lead to a material financial impact.

MásMóvil is the fourth-largest telecom operator in Spain, offering fixed-line, mobile and internet services to residential and business customers. Its main brands include Yoigo, MásMóvil, Pepephone, Llamaya and Lebara.

Goldman Sachs and BNP Paribas are global coordinators of the MásMóvil transaction, and replies are due May 22. Barclays, BBVA, J.P. Morgan, Santander and Société Génrale CIB are the full joint book runners.