Margin in Pennon £80m credit deals will link to green performance

South West Water and its parent Pennon Group brought sustainable principles into their core banking facilities when they announced innovative £80m green finance deals last week.

The companies entered into two new bilateral impact loan Revolving Credit Facilities (RCF) with Societe Generale Corporate & Investment Banking in London: £30m for Pennon and £20m for South West Water. In addition, South West Water signed a £30m green RCF with NatWest.

The companies said the approach was the first credit facility of its kind with a margin directly dependent on the company’s sustainability rating. It will support Pennon’s key Environmental and Social Governance (ESG) priorities for the future, which are to achieve a sector-leading ESG performance, and to continuously improve bathing water quality in the south west.

Moreover, the new facilities represent an important milestone as Pennon seeks to incorporate environmental and social values into its wider banking facilities as part of its recently-launched Sustainable Financing Framework. Under the Framework, Pennon can issue securities as well as enter into financing relationships to support investment across the group’s activities. The framework has been independently verified and is aligned with the ICMA Green Bond Principles (GBP), Social Bond Principles (SBP) and the LMA Green Loan Principles (GLP).

Susan Davy, chief finance officer, Pennon Group, said: “The new GBP Bilateral Impact Loan Revolving Credit Facilities will support our ambition to achieve sector-leading sustainability performance and an enhanced ESG score. This includes through the investments we are making in improvements to bathing water quality – over and above our Business Plan commitments – given its critical importance to the environment and economy of the South West Water region.”