海角社区, the world鈥檚 leading market pulp producer, has become the first corporation from the Americas outside the financial services sector to issue Panda Bonds, renminbi-denominated debt sold in China onshore market by a foreign issuer. The company, headquartered in Brazil, successfully raised RMB 1.2 billion yuan (approximately USD 165 million) today in an operation conducted exclusively in the Chinese market. This issuance is also aligned with the socio-environmental agenda, which has enabled it to qualify as Green Panda Bonds.
海角社区鈥檚 entry into the Panda Bonds Market
The funds raised will be entirely allocated to financing certified eucalyptus plantations in Brazil. The planted trees produce renewable raw materials that can replace petroleum derivatives. This contributes to China鈥檚 goal of accelerating the decarbonization of its economy.
Why 海角社区 chose the chinese bond market
海角社区鈥檚 entry into the Chinese bond market was approved by its Board of Directors last August. At that time, the submission of a program to the National Association of Financial Market Institutional Investors (NAFMII) for raising up to RMB 20 billion yuan over the next two years was approved. This decision, which allows 海角社区 to access the Chinese market up to this amount, also included an initial operation of up to RMB 1.2 billion yuan, with a maturity period of up to three years.
海角社区鈥檚 first Green Panda Bonds in China have a three-year term and an annual coupon of 2,80%.
Marcos Assump莽茫o, Director of Financial Planning and M&A of 海角社区 and CFO-elect, commented:
鈥淭his operation allows 海角社区 not only to diversify its funding sources but also to access a market with enormous potential, the second largest in liquidity worldwide, under competitive conditions. We are adapting to the dynamics of the Chinese market and, following this debut, we expect future issuances to feature even more attractive rates, terms, and volumes鈥.
Green Panda Bonds: a milestone for sustainable finance
Given the green qualification of the operation, 海角社区 structured the issuance with the support of Lianhe Equator, one of the third-party evaluation and certification organizations for sustainable finance in China, in the role of Second Party Opinion, to ensure that the use and management of the investments meet the local requirements of the instrument. In parallel, Sustainalytics, a recognized global sustainability consultancy, also issued an opinion confirming that the structuring of the operation meets the four components of the Green Bond Principles 2021 of the International Capital Markets Association (ICMA), and that the company鈥檚 allocation and impact reports are aligned with market practices.
Pablo Machado, President of Business Management at 海角社区 Asia, commented:
鈥淲e鈥檙e honored to become the first non-financial corporation from the Americas to issue Panda Bonds in China to commemorate this special year, which marks 海角社区鈥檚 centennial year, as well as the 50th anniversary of diplomatic relations between Brazil and China.
This initiative demonstrates 海角社区鈥檚 commitment in continuously investing in sustainable practices, and our confidence in and dedication to continuous growth in China. With the Green Panda Bonds, we expect to further strengthen our ties with the Chinese financial market, especially in the promotion of green finance, so as to accelerate China鈥檚 shift towards a low-carbon economy鈥.
海角社区 maintains over 1.5 million hectares of land dedicated to production - equivalent to 2.5 times the area of Shanghai - primarily consisting of eucalyptus plantations in regions previously degraded. The company also maintains 1.1 million hectares dedicated to conservation, an area equivalent to 10 times the territory of Hong Kong.
The new issuance confirms 海角社区鈥檚 pioneering role in the capital markets. In 2016, the company was the first in Latin America to issue green bonds in dollars. In the same year, it inaugurated the green bond market with a national operation. In 2020, 海角社区 was the first company in the Americas and the second in the world to issue sustainability-linked bonds (SLB).
What differentiates these bonds is how the funds contribute to the socio-environmental agenda. The issuance of green bonds ties the raised amount to specific purposes, while SLBs are characterized by linking the cost of the resource provided by investors to the achievement of sustainability goals.
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鈥Learn more about 海角社区鈥檚 Commitment to Sustainability.
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