ESG House: Credit Agricole

Top-down triumph

Green, social and sustainable financings gathered pace in Asia in 2019, and one bank led from the top as a trusted adviser to governments and industry leaders alike. For its commitment to sustainable development, Credit Agricole is IFR Asia’s ESG House of the Year.

The sustainable finance market took a big step forward in Asia Pacific in 2019 as policymakers threw their weight behind new products. Credit Agricole stood out in an increasingly crowded field, using all of its global experience to help shape the market for the future.

The French bank played a key role on sovereign issues from Hong Kong and South Korea, led the way in Korea and helped bring first-time issuers to the green bond market. It introduced state-owned Chinese borrowers and industry leaders to the sustainability-linked loan market.

“The key change in 2019 was the development of sovereign issuance in Asia,” said Dominique Duval, head of sustainable banking for Asia Pacific.

The bank’s signature deal of the year was the Hong Kong government’s US$1bn debut green bond, priced on May 21. The deal positioned Hong Kong as a hub for green finance and set a high standard for others to follow, with a transparent green framework that satisfied even the pickiest investors. Half of the deal went to investors in Europe and the US.

Hong Kong named the French bank as one of two green structuring advisers, alongside local stalwart HSBC, in a strong endorsement of Credit Agricole’s own green credentials.

Credit Agricole followed that up with a novel US$500m Green and Sustainability bond for the Republic of Korea, part of a US$1.5bn sovereign issue in June. The five-year tranche met global green bond standards but also carried a sustainability label, a signal of the government’s determination to drive local companies towards the global Sustainable Development Goals.

Credit Agricole also promoted sustainability issuance in the Uridashi market, where Japanese investors are increasingly demanding socially responsible investments, and it was also joint bookrunner on the Asian Infrastructure Investment Bank’s US dollar debut, a US$2.5bn five-year sustainability bond in May that came with ESG issuer ratings from ISS-Oekom and Sustainalytics.

“The SSA franchise is very important,” said Benjamin Lamberg, head of Asian credit and global head of MTNs & private placements. “Everyone has to be able to talk about green finance.”

The financial sector – other than public policy, the most important driver of borrowers’ behaviour – was a particular focus. Credit Agricole was the sole green structuring adviser for Agricultural Development Bank of China’s Eu500m debut in November 2018, which was aligned with both Chinese and global green bond standards.

Credit Agricole also worked on the biggest green bond from China in 2019, helping ICBC structure the green framework for its US$3.1bn-equivalent Greater Bay Area-themed bond in September. It was also joint green adviser for ICBC Singapore’s multi-currency Belt and Road green bond in April.

In Korea, the bank added innovation with the world’s first sustainable offering of Additional Tier 1 capital, raising US$500m for Kookmin Bank, and brought Woori Bank to Taiwan for a US$450m five-year floater, the first sustainability Formosa bond from Korea.

Credit Agricole also helped Bank Rakyat Indonesia establish its sustainability bond framework ahead of a US$500m five-year deal in March – the first sustainability bond from a South-East Asian bank in the Reg S market.

In the loan market, Credit Agricole was again instrumental in developing new products. It was green structuring agent, mandated lead arranger and bookrunner on the first offshore syndicated green loan for a Chinese central SOE, China General Nuclear Power Corp’s US$500m five-year term loan that was three times oversubscribed in syndication.

It was also bookrunning MLA on a US$2.3bn sustainability-linked loan for Cofco International, which came with margins linked to targets such as increased traceability of its agricultural commodities.

The sustainability-linked format provides a powerful incentive for borrowers to adjust their business practices, and Credit Agricole used its own balance sheet to help push the concept forward. Its HK$500m revolving credit facility for Hong Kong’s Swire Properties offers a lower margin if the borrower hits both external and internal targets: inclusion in the Dow Jones Sustainability World Index and improved energy efficiency in its property portfolio.