These instruments tie coupon adjustments to measurable ESG outcomes across the firm’s consumer-facing portfolio, which includes brands such as Pret A Manger, Krispy Kreme, JDE Peet’s, and Keurig Dr Pepper. The relevant KPIs span board gender diversity and Science Based Targets initiative (SBTi) adoption.
In this note, we assess the likelihood that JAB will meet these two near-term targets. The EUR bond is linked to a requirement that 80% of portfolio companies — weighted by invested capital at fair value — hold SBTi-approved climate targets by year-end 2025. The USD bond is tied to a governance target stipulating that all portfolio companies achieve at least 30% female representation on their non-executive boards. Our assessment is that both targets are a Likely Miss.
The bond pricing implications of these findings appear slight. Both SLBs carry a 10bps coupon step-up upon target failure. Our analysis suggests that current market pricing may not fully reflect the probability of these step-ups being triggered: the EUR bond appears priced close to JAB’s fitted yield curve, while the USD bond’s long duration amplifies the upfront cost of the step-up, estimated at approximately 1.10% given a 75% miss probability. Confirmation of target outcomes is expected in Q1 2026, consistent with JAB's historical reporting schedule.
