Huge demand for Africa’s first sustainability-linked bond

By Kate Birch
An overwhelming level of interest in Africa’s first sustainability-linked bond from Netcare and Standard Bank demonstrates huge demand for ESG in Afri...

South Africa’s largest hospital group, Netcare Group, has partnered with Africa’s biggest bank Standard Bank to unveil a sustainability-linked bond. 

Not only is this bond the first of its kind in the healthcare sector in Africa, it is also Africa’s first sustainability-linked bond, and is a boost to the ESG drive that is picking up pace across the continent and especially among corporates in South Africa. 

Africa ESG demand picking up pace

Demand for sustainability-linked loans, green bonds and social bonds is rising fast across the continent. This is demonstrated by the high level of interest the market has expressed for this particular transaction. 

“We are encouraged by the overwhelming level of interest and demand the market has expressed for sustainable product offerings which was evidenced by the extent to which the bond was oversubscribed,” says Nigel Beck, Global Head Sustainable Finance at Standard Bank. 

How does this sustainability-linked bond work?

The coupon rate of this innovative sustainability-linked bond is linked to Netcare’s achievement of certain pre-agreed sustainability performance targets, helping the group achieve its longer term goals. 

Over the last year, Standard Bank has worked closely with Netcare and institutional investors on this sustainability-lined product offer, advising on meaningful sustainability performance targets aligned to Netcare’s corporate strategy. 

Through the offering of the sustainability-linked bond, Netcare has been able to access a “deeper pool of liquidity at a compressed upfront pricing level, with the added incentive of a quantifiable future pricing benefit while investors are able to encourage positive forward looking sustainable corporate behaviour,” says Carl Wiesner, debt capital market transactor at Standard Bank.

Netcare leader sustainability in global healthcare 

The bond will further help Netcare Group, which has close to 30,000 employees, achieve its long-term sustainability ambitions which includes targets to reduce its energy consumption, procure more renewable energy, reduce total carbon emissions, and improve its water efficiency across its hospital properties. 

As of 2020, the company had already made significant progress with its sustainability programme, from its 24% reduction in energy intensity per bed since 2013, to its 37% reduction in scope 1 and 2 carbon dioxide emissions since 2013, and as a result is the only healthcare institution globally to have received gold awrads in each of the four categories in the International 2020 Health Care Climate Challenge Awards.  

Dr Richard Friedland, Group CEO of Netcare says, “Our comprehensive environmental sustainability strategy developed in 2013 is firmly on track to meet our 10-year goals and targets."

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