Japfa unit prices US$350m sustainability-linked bond at 5.375%

A SUBSIDIARY of agri-food company Japfa has priced a US$350 million senior fixed rate sustainability-linked bond (SLB) due 2026 at 5.375 per cent.

As at Dec 31, 2020, Japfa owns about 54.5 per cent of Japfa Comfeed Indonesia, which launched the bond.

The SLBs are listed on the Singapore Exchange and the issue was oversubscribed, the company said in a press statement on Tuesday.

Net proceeds from the issue will be used to repay the existing US$250 million notes due 2022 and for general corporate purposes, including but not limited to capital expenditures, working capital and debt refinancing, Japfa said.

According to the firm, the bond prioritises an environmental key performance indicator linked to a sustainability performance target to minimise water pollution from untreated wastewater.

Over the next three years and nine months from the date of the SLB issuance, the target is that Japfa Comfeed Indonesia will construct eight water recycling facilities out of 15 slaughterhouses under its poultry operations, and one water recycling facility at a hatchery within the poultry breeding unit.

The achievement of the sustainability performance target will be validated by a certification of completion from the building contractor.

If this target is not met, investors will be entitled to receive a 25 basis point coupon step-up, applicable to the remaining interest periods, Japfa noted.

It added that the issuance reinforces its commitment to sustainability and the alignment to the United Nations Sustainable Development Goals, especially the goal to end hunger, achieve food security and improved nutrition, as well as to promote sustainable agriculture.

Japfa's chief executive Tan Yong Nang noted that the SLB is the third issuance of Japfa Comfeed Indonesia and that the company is "pleased with the positive response received from the market".

The bond is assigned a provisional rating of BB- by Standard & Poor's and BB- by Fitch, while Credit Suisse and DBS were the joint global coordinators and joint SLB structuring advisers.

As at 9.55am on Wednesday, Japfa shares were trading at 88.5 Singapore cents, down 0.5 cent or 0.6 per cent.