LANXESS underpins its commitment in the area of sustainable finance and successfully placed its first sustainability-linked bond on the European capital market. The benchmark bond with a volume of EUR 600 million has a tenor of eight years and a coupon of 0.625 percent. The interest rates of the bond are linked to the achievement of LANXESS’ climate target. The company aims to reduce its CO2e emissions by 600,000 metric tons to 2.6 million metric tons by 2025 compared to the base year 2018. If LANXESS does not achieve the target, the interest rate will increase by 0.250 percentage points per annum for subsequent interest periods until maturity.

 

LANXESS will use the funds to finance the acquisition of the Microbial Control business from U.S.-based group IFF, which was announced in August. “With this bond, we have already fully completed the financing of the planned acquisition of IFF Microbial Control. We are pleased to see the positive response from the capital market,” said LANXESS Chief Financial Officer Michael Pontzen. “With our first sustainability-linked bond, we are underlining our commitment to sustainability also in our financing activities.” The company aims to be climate neutral by 2040.

 

For the issuance of sustainability-linked bonds, LANXESS has established a framework which aims to provide the necessary transparency to investors. The framework aligns with the “Sustainability Linked Bonds Principles” of the “International Capital Market Association” (ICMA). ISS ESG, a rating agency specializing in sustainability, has assessed LANXESS’ framework and considers the climate targets as relevant and ambitious. 

 

LANXESS has been active in sustainable financing already at an early stage. In December 2019, the specialty chemicals company had agreed on a sustainable revolving credit facility of EUR 1 billion with interest rates linked to the successful reduction of its CO2e emissions (Scope 1) and the increase in the proportion of women on the top three management levels.

 

The new bond is listed on the Luxembourg Stock Exchange in denominations of EUR 100,000. LANXESS’ issuer ratings are currently Baa2 (Moody's), BBB (Standard & Poor's) and BBB+ (Scope). A bank consortium consisting of Citi, Deutsche Bank and DZ Bank was mandated to place the bond. In addition, Deutsche Bank acted as the sustainability-linked structuring advisor.