Record-setting sustainability-linked loan delivered with advice from legal giants

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Two legal giants have played a key role in a record-setting $1.4bn loan.

King & Wood Mallesons (KWM) advised Sydney Airport on its sustainability-linked loan. Allens advised the syndicate of major domestic and international lenders, which include joint sustainability co-ordinators and bookrunners, Australia and New Zealand Banking Group and BNP Paribas.

Sustainability-linked loans mean that the facility’s pricing will increase or decrease depending on the borrower’s performance in sustainability metrics, which in this case is a range of environmental and social-impact criteria in line with the Sustainability Linked Loan Principles (SLLPs) launched by the Loan Market Association, the Asia Pacific Loan Market Association (APLMA), and the Loan Syndicated and Trading Association on 20 March. The metrics are assessed by Sustainalytics, an independent third-party evaluator.

The firms said the transaction is the first syndicated sustainability-linked facility in Australia. It is also the largest of its kind in both Australia and the Asia-Pacific region, as well as the first for an airport in the world.

The KWM team was led by partner Yuen-Yee Cho, who is the firm’s global practice coordinator for banking and finance. She was supported by senior associate Zoe Anderson, solicitor Hilary Qin, and law graduate Anita Wu.

The Allens team was headed by banking and finance partner Renee Boundy, who was assisted by senior associate Edward Chuah and lawyer Kate Buchanan. Tax matters were handled by senior associate Elise Ho.

“This innovative transaction demonstrates Sydney Airport’s commitment towards sustainability by linking its sustainability performance to pricing under the facilities,” Cho said.

Cho said that as far as KWM knows, the facility is the first to close in the market applying the SLLPs.

“As a member of the APLMA's green and sustainable loan committee, and a big fan of the product, it's encouraging to see real commitment from such a large number of lenders to deliver a product that recognises and rewards the ESG (environment, social,and governance) improvements and establishes a transparent regime by which lenders – and the market – can benchmark ESG performance,” Boundy said.