Carrefour: 1 SLB, 2 KPIs, 3 Scopes of emissions included

3 minute read

Carrefour (ticker CAFP), a French multinational retail company, is in the market with a seven-year Sustainability-Linked Bond (SLB). Books were just under 4x oversubscribed, slightly above average for 2023.

Looking at current market pricing, it is hard to confidently observe a pricing discount for the existing SLBs compared to traditional debt. This could imply that the market believes these targets to be unambitious.

The structure of the new SLB does appear to be more ambitious; it includes a more stretching target for Scope 1 and 2 emissions than previously and includes Scope 3 emissions. It also re-pivots the retail giant’s sustainable financing framework towards climate change-related KPIs that are complementary to their existing issuance, which included circular economy sustainability targets.

Ambitious SLB targets give investors a higher chance of receiving the coupon step-up, and so should be rewarded with lower financing spreads. If the market considers these targets to be more challenging, we would expect the bond to outperform existing issuance.