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Aviva Investors and BNP Paribas complete first ESG SONIA swap repack with Associated British Ports

viva Investors, the global asset management business of Aviva plc (‘Aviva’), has announced it has jointly completed an ESG-linked interest rate swap repack with BNP Paribas, and which has been provided to Associated British Ports (‘ABP’).

The 30-year transaction is believed to be the first SONIA-linked interest rate swap institutional repack, and the first institutional repack transaction to have sustainability-linked key performance indicators (KPIs) attached to it. The performance targets were subject to second party verification by ISS, to ensure they were both sufficiently material and ambitious in nature, whilst also remaining aligned to LMA sustainability-linked loan principles.

As part of the deal, a discount is offered to ABP on its hedging rate, provided it meets certain ESG KPIs, including a significant reduction in combined Scope 1 and Scope 2 emissions by 2030, building on the 36% reduction it has achieved in absolute greenhouse gas emissions since 2014.

The agreement with ABP and BNP Paribas is the latest sustainability-linked financing Aviva Investors’ Real Assets business has invested in on behalf of Aviva UK Life, as it seeks to decarbonise its portfolio and transition to net zero by 2040. The transaction also highlights BNP Paribas’ commitment to innovating in sustainability-linked finance to support corporate and institutional clients.

Munawer Shafi, Head of Structured and Private Debt at Aviva Investors, said:

“We are delighted to have completed this innovative transaction with ABP and BNPP. It demonstrates our ability to incorporate tailored sustainability considerations into bespoke transactions, without compromising on outcomes for borrowers or risk-adjusted returns for our clients. We hope this transaction will catalyse the adoption of ESG-linked transactions in the swap repack space.”

Ashish Dafria, Chief Investment Officer, Aviva UK Life, said:

“As a business with a long-term focus, ESG and sustainability is at the heart of what we do at Aviva. In order to deliver strong customer outcomes, both long term economic and environmental sustainability are key considerations for us and go hand in hand. We are pleased to support what is believed to be the first sustainability linked swap repack with ABP, a long-term partner who is working hard for a sustainable future and shares our ethos.”

Matthew Ponsonby, Head of Global Banking, BNP Paribas UK added:

“Incentivising the net zero transition through finance can be a powerful mechanism to accelerate both the corporate and investor decarbonisation trajectory. This innovative transaction in a major sector like UK transportation highlights the value of sustainable finance extending into the derivatives market, whilst also demonstrating the need to support corporates such as ABP in holistically integrating transition targets into their financing needs.”

Marina Wyatt, Chief Financial Officer, Associated British Ports, said:

“ABP recognises that it has an important role to play in helping the UK to reach net zero, and decarbonising our own operations is a vital part of this. We are proud to be partners for the first swap repack transaction with sustainability-linked key performance indicators, demonstrating our commitment to sustainability. We have reduced our absolute Greenhouse Gas Emissions by 36% since 2014, and this underlines our ambition to continuous improvement and even greater reductions in the future.”