Thursday, February 22, 2024

Freshfields counsels Colonial on green bonds conversion

Freshfields has advised Inmobiliaria Colonial on the successful conversion of all of the Colonial group’s outstanding senior bonds into 'green bonds'


The bonds represent an aggregate principal amount of €4.6 billion and were issued by Inmobiliaria Colonial and its French subsidiary SFL (Société Foncière Lyonnaise). They are listed on Euronext Dublin, Euronext Paris and the Spanish fixed income market AIAF.

Colonial and its French subsidiary Société Foncière Lyonnaise completed the requalification of all of the Group’s outstanding bonds with an aggregated outstanding principal amount of €4.6 billion into “green bonds”, following the approval of their bondholders.

The Group has reached this milestone thanks to its portfolio of environmentally sustainable investments with a value equal to or greater than the outstanding nominal of its outstanding bonds. As a result of this transaction, Colonial becomes the first Ibex-35 company to have all its bonds qualified as “green”. Green bonds constitute an alternative to corporate financing in an environment in which the awareness of companies on sustainability issues has become more relevant than ever. This type of debt is intended to finance “green assets” that would have a positive impact on the environment. The Group’s intention is that any bonds it proposes to issue in the future will be issued under the Group’s Green Financing Framework as “green bonds” (subject to the availability of green assets at the time of any such issue).

The bondholders have approved the modification of the “Use of Proceeds” of such bonds from “General Corporate Purposes” to “the financing or refinancing of a portfolio of eligible green assets”. Crédit Agricole Corporate and Investment Bank and Freshfields Bruckhaus Deringer have advised the Colonial Group in this process. The requalification of the outstanding bonds into “green bonds” will not entail any changes to their characteristics, terms and conditions, interest rates or maturities.

“We are very satisfied with the willingness shown by the market to join us in our commitment to sustainability,” explained Carmina Ganyet, Colonial’s Corporate general manager. According to Ganyet, the requalification of the outstanding bonds into “green” and the issuance of new bonds under this category represent ”a competitive advantage and an attractive investment for the capital markets, whose interest in this type of investment is increasing.”

The Group actively manages its indebtedness and during the first nine months of 2021, Colonial refinanced more than €1 billion, optimising its average cost of financing, improving its diversified debt profile and the maturities of its borrowings. This “liability management” has enabled the Group to bring the cost of its debt below 1.5%. At the end of September 2021, the Group had a net debt of €4,645 million, of which €2,812 million corresponded to bonds issued by Colonial and €1,290 million to bonds issued by SFL, in addition to the €500 million bonds issued by SFL in October 2021. The Group’s Loan to Value at 30 September 2021 stood at around 37%.

The Freshfields´ team advising Colonial was led by Paris partner Fabrice Grillo and Madrid counsel Joe Amann, with the support of Madrid managing partner David Franco, Madrid associate Chelsey Kaka, Paris associate Lou Bernard, London partner Duncan Kellaway, Madrid associate Javier González Egaña and Madrid trainee solicitor Chloé Clavell.

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