Chicago, July 5 – Heathrow Funding Ltd. priced €650 million of 4.5% sustainability-linked bonds due 2035 (BBB+/A-) on Wednesday, a market source reported.
The bonds priced at 99.59 to yield 4.552%, or at mid-swaps plus 148 basis points.
Initial price talk was mid-swaps plus 165 bps to 170 bps.
The bonds are callable with a Bunds plus 35 bps make-whole premium until the optional three-month par call period.
The coupon will step up 25 bps for each target Heathrow fails to meet. The issuer must cut carbon emissions ‘in the air’ by 15% by Dec. 31, 2030, compared to a 2019 baseline. The second target is a 46.2% cut in carbon emissions ‘on the ground’ by Dec. 31, 2030, also against a 2019 baseline.
The maximum cumulative step-up is 100 bps for the two interest periods potentially affected by a step-up event.
Additionally, if the bonds are not redeemed on the final maturity date of July 11, 2035, the coupon will reset to Euribor plus 400 bps.
NatWest Markets (billing and delivery), Barclays, BNP Paribas, Lloyds and RBC Capital Markets worked as active bookrunners.
The order book went over €1.95 billion.
Proceeds will be used for general corporate purposes.
The issuer is the financing arm for Heathrow (SP) Ltd. of the Heathrow Airport Holdings Ltd. group that operates airports including London Heathrow Airport Ltd.
| Issuer: | Heathrow Funding Ltd.
|
| Amount: | €650 million
|
| Issue: | Sustainability-linked bonds
|
| Maturity: | July 11, 2035
|
| Bookrunners: | NatWest Markets (billing and delivery), Barclays, BNP Paribas, Lloyds and RBC Capital Markets
|
| Sustainability structuring bank: | Societe Generale
|
| Sustainability opinion provider: | DNV
|
| Coupon: | 4.5%
|
| Price: | 99.59
|
| Yield: | 4.552%
|
| Spread: | Mid-swaps plus 148 bps
|
| Call features: | Make-whole call at Bunds plus 35 bps; three-month par call
|
| Trade date: | July 5
|
| Settlement date: | July 11
|
| Ratings: | S&P: BBB+
|
| Fitch: A-
|
| Distribution: | Regulation S
|
| Price talk: | Mid-swaps plus 165 bps to 170 bps
|
| ISIN: | XS2648080229
|
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