Ardagh in record size green bond deal
A DEBT deal for Paul Coulson’s new Ardagh Metal Packaging (AMP) will be the biggest ever in the world of high-yield green corporate bonds.
The planned $2.8bn (€2.3bn) issue of new debt is part of the structure behind the spin-out of AMP as a standalone recyclable beverage can business that will have greener credentials than Ardagh itself.
Green bonds are used to fund environmentally sound projects and businesses and can attract pockets of capital not available to most corporate borrowers.
Governments and infrastucture funds have been tapping the market, but it is rarer for companies – especially higher debt non-investment grade or ‘junk bond’ issuers.
AMP’s bond deal is three times the size of the previous record for a sub investment-grade borrower, according to Reuters.
AMP, will be listed in the US and valued at around $8.5bn.
It is being created from a combination of some Ardagh assets with investment from partner Gores Group.
Aluminium cans are in high demand and are easier and cheaper to recycle than glass packaging helping make the new listed entity “a pretty attractive business” to investors with environmental, social and governance (ESG) targets, Mr Coulson told the Irish Independent earlier this week.
Ardagh Group’s customers include Diageo, Heineken, Pernod Ricard, Nestle and Coca-Cola.
It employs more than 16,000 people.
Mr Coulson said the beverage can business has been “very strong” in part due to a shortage of cans in the United States and elsewhere.
Azhar Hussain, head of global credit at Royal London Asset Management, said the deal’s scale was “significant”, adding it could allow investors to gauge whether the ‘greenium’, or pricing benefit companies get from issuing a green bond, extends to the high-yield market.
In an investor presentation, AMP did not identify any immediate green use for the cash raised.
The vast majority of the proceeds from the bond sale and new equity issuance will go to Ardagh to help pay for the spin-out of AMP from the parent company, which will retain an 80pc stake in the new business.