SLPs are just 1% of the unrated Euro SLB market, and so this new deal is significant in an embryonic market. However, the way that rating agencies treat these securities has likely impeded the take-up of sustainability-linked hybrids, and we believe any major global rating agency confirming eligibility of equity treatment could catalyse the growth of this product.
Broadly, we conclude that this issuance offers a chance to improve transparency and dialogue with a privately-owned company, and that this bond has much to commend it. The renewables KPI is relevant for the issuer, and the target requires ongoing improvements against a backdrop of a growing business. Furthermore, this bond is not just rare as a perpetual, it also extends the market in SGD-denominated securities and amongst wireless telecoms issuers. This helps broaden the offering of sustainability-linked products for investors.