In the industry’s first, Glenmark has raised $228 million in Sustainability-Linked Loan (SLL) from a consortium of foreign lenders, led by Bank of America.
Bank of America, the sole underwriter of the entire loan, has extended $50 million, and Cincinnati, Ohio-based Fifth Third Bank chipped in with $30 million, the company said.
“We have raised an SLL of $228 million under the ECB (external commercial borrowing) category at a significantly lower cost to refinance its existing ECB debt. This we believe is the first SLL loan by a domestic pharmaceutical company,” VS Mani, Executive Director and Chief Financial Officer, Glenmark, told PTI recently.
The five-year loan is priced at 175 basis points (bps) over the London interbank offered rate, or Libor which is being replaced by the SOFR, or the secured overnight financing rate.
The SOFR is the benchmark interest rate for dollar-denominated derivatives and loans that is replacing the scam-ridden Libor.
The interest margin will come down by 2.5 bps if the borrower meets both the sustainability metrics relating to emissions reduction and water consumption, the Bank of America explained.
Glenmark will use the fund to refinance a $182.5 million syndicated loan, closed in November 2020, Mani added.
The other lenders in the consortium include the leading Taiwanese lender CTBC Bank, Emirates NBD and Qatar National Bank Singapore branch, which gave $24 million each. While Mashreq Bank and Japan’s MUFG and Siemens Bank Singapore branch extended $20 million.
ING Bank and KEB Hana Bank Bahrain branch chipped in with $8 million each.
Edits by EP News Bureau