Fossil lending

Port of Newcastle junked as debt wall approaches

Written by Ulf Erlandsson

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Port of Newcastle (PONEIV) is the world’s largest coal terminal, with an average throughput of 140-160 million tonnes per annum, equivalent to around 500 million tonnes of CO2e emissions.

PONEIV brought attention to itself when launching a USD benchmark bond back in 2021. Our analysis concluded that the bond pricing illustrated an elevated cost-of-capital for coal-related credits.

S&P downgraded PONEIV to BB+ from BBB-. The reliance on coal, with an uncertain Asian outlook, is mentioned as one reason for this rating action. Fitch rates the company at BBB-, unchanged since issuance but affirmed in May 2023. Moody’s previously rated the company but withdrew the rating a year ago. This means that the credit now sits at a split rating between investment grade and high-yield.

Furthermore, the company has substantial loan maturities coming due, for a total of AUD506mm ($325mm). To refinance this debt, the company could either tap the bond market, or seek to renew loan financing where only select coal-financing banks will still offer capital. In the context of sustainable financing, PONEIV carries some significance; it has four sustainability-linked loans (SLLs), with KPIs covering a range of social and environmental metrics.

About the author

Ulf Erlandsson

Ulf Erlandsson

Founder, Board member

Dr Ulf Erlandsson founded the Anthropocene Fixed Income Institute and was its first CEO. A pioneer of climate-focused fixed income portfolio management, he was named Environmental Finance’s Bond Personality of the Year 2022.

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