Spanish banking group BBVA and Mexican REIT Fibra Uno entered into a deal creating a first in Latin America: the first revolving credit line in Latin America. According to BBVA, it entered into a deal with Fibra Uno because it is a strategic move for the bank.
The transaction also became the first sustainable deal of its kind by a real estate business in the region as well as the first facility to be arranged in accordance with the 'sustainability-linked loan principles.'
BBVA serves as a sole sustainable agent in this arrangement, worth around $1.11 billion to be split into two tranches. The first one is a guaranteed $66 million while the second one is around $21.5 million. The facility will be linked into the company's credit rating and the performance of an environmental indicator, hence the label 'sustainable.'
The transaction has been observed by Vigeo Eiris, a sustainability watchdog, and said that it considered this transaction to be in alignment with the said principles. The new 5-year sustainable revolving credit facility replaces that of an $885 million previous line of credit introduced in 2015.
The deal, which was advised to Fibra Uno by Holland & Knight, was for a five-year sustainable credit agreement. According to the Global Legal Chronicle, it is an unsecured revolving credit facility which incorporates a sustainability-linked pricing grid. It reduced borrowing if certain benchmarks are completed each year.
The facility is revealed to be compliant with the Loan Syndications and Trading Association's (LSTA) policies on Loan Principles. Fibra Uno is also the first Mexican borrower to come into such an agreement through the help of institutions like Banco Santander Mexico and Grupo Financiero BBVA Bancomer, among other such institutions. It was also finalized on July 23.
BBVA's deal sustains its Pledge 2025 policy last launched in 2018. Through this deal, BBVA is mobilizing $111 billion from this year until 2025. The money will be used in investments in the green sector. Everything from sustainable infrastructure to financial inclusion is of top priority to the company. By December 2018, the bank had already committed $12 billion into the fund.
Fibra Uno, or FUNO, is an active player in the debt market. It seeks financing on an "ongoing basis" in line with its plans for expansion and growth. A $1.11 billion international bond was issued to FUNO in June 2019 to refinance debts the institution has incurred and for the development of its portfolio.
