H&M, the fast fashion brand from Sweden, has cut its yield on its debut bond by half. The move followed strong demand from investors for the retailer’s sustainable debt.
The investment-grade notes, reportedly, attracted orders that were nearly worth €3.8 billion. This, significantly, covered the blowout deal over 7 times and helped the Swedish retailer slash the spread by 50 basis points between initial price talk and final terms.
One of the biggest reasons for success of such bonds has been the sustainability aspect wherein the interest on notes surges if major performance indicators like recycled materials’ target or emissions are not met.
Talking about the deal, Lars Mac Key, Head Sustainable Bonds, Danske Bank, said that the deal has opened doors for issuers to come to the market and meet the sustainability-focused investor community.
Notably, Danske Bank was one of the banks that helped market €500 million offering.
Lars Mac Key now hopes issuers from other industries to do the same on the back of H&M’s transaction.
