TDC Net prints its seventh SLB

All its outstanding SLBs are tied to two Sustainability Performance Targets (SPTs): reductions in Scope 1 + 2 emissions and Scope 3 emissions versus a 2020 baseline.

However, the observation dates for these targets vary across instruments, and appear to be driving subtle pricing differences that could reveal investors’ expectations on the likelihood of step-ups.

AFII’s analysis of TDC Net’s bond curve shows that spreads between its 2031s and 2032s are flat. This means the latter are trading slightly tighter than the former on a relative basis, which in turn could imply that investors believe the 2032s have a higher probability of triggering a coupon step-up. This may imply that the longest dated Scope 3 target, in 2029, is the most ambitious. 

The newly issued 2033 SLB references the same SPTs as the 2032s, suggesting similar market expectations for its pricing trajectory as it settles into secondary trading.

About the authors

Prahalad Prasad

Associate Director, Research

Based in London, Praha covers topics including but not limited to the just transition, sustainability-linked bonds and deforestation. He previously spent seven years in Lloyds Bank’s Debt Capital Markets team.

Emiel Loh

Emiel was formerly a Research Analyst at AFII.

Josephine Richardson

Managing Director, Head of Research

Based in London, Jo leads AFII’s research and a global team supporting fixed income investors as they align their portfolios with climate and sustainability goals. She joined AFII after 18 years in fixed income markets at JPMorgan.