Celsus, the commercial operator of the Royal Adelaide Hospital Public Private Partnership (PPP), has closed a $A2.2 billion refinancing in sustainability loan format, with ANZ acting as joint sustainability coordinator. It’s the first such deal in Australia and the latest loan format in the fast-moving green, social and sustainable financing market.
A sustainability loan by definition is a facility supporting economic activity, which mitigates environmental and social issues and challenges, and achieves positive green and social outcomes, according to the Green Loan Principles and Social Loan Principles respectively.
While the Green Loan Principles were first published in 2018, the Social Loan Principles are a recent development. Jointly published in April 2021 by industry bodies Asia Pacific Loan Market Association, Loan Market Association and LSTA, the Social Loan Principles are modelled after the International Capital Markets Association’s Social Bond Principles, an established bond format in the international capital markets.
The emergence of social loans and sustainability loans in the market is a positive – and logical - development for the sustainable finance market explained Tania Smith, Director – Sustainable Finance, ANZ.
“The COVID-19 pandemic has driven the issuance of social bonds to mitigate social risks such as access to food, healthcare, education and utilities,” she said.
“The emergence of social and sustainability loans is a logical step in the financial industry’s response to the inequalities highlighted by the pandemic.”
Social loans and sustainability loans have a wide application for social projects and can include affordable housing, affordable basic infrastructure and access to essential services such as education, public healthcare and financial services.
The project company Celsus manages and maintains the Royal Adelaide Hospital PPP under a 30-year concession until 2046. The sponsors are Aberdeen Standard Investments, AMP Capital, InfraRed Capital Partners, The Infrastructure Fund, HRL Morrison & Co, and MM Capital Partners.
The hospital is the largest public hospital in South Australia, delivering a wide range of services including medical, surgical, emergency, acute mental health, outpatient and diagnostic.
It was the first large-scale hospital complex in Australia to achieve a “4-Star Green Star – Healthcare As Built” rating from the Green Building Council of Australia, based on its sustainable design and construction as well as its operation, fit out and positive impact on staff and patients.
The transaction has secured funding for a critical public infrastructure and health asset, aligned with the overall sustainability strategy of the state. The sustainability loan also ensures the borrower is committed to ongoing annual public reporting on the project’s green and social outcomes.
The refinancing was well received by the lender group due to the strong environmental and social benefits of the project, Smith said.
“There is strong demand for assets that support a low carbon future and a more inclusive society, as well as demand for ESG-labelled transactions from financial institutions,” she said.
“Lenders are keen to positively influence the social and environmental outcomes of their customers.”
Sharon Klyne is Associate Director, Institutional Communications, ANZ