BBVA and Acerinox make history by closing the first sustainable transaction in the steel industry in Spain. The deal, a bilateral loan totaling €80 million with a maturity of five years, is intended to partially finance the Acerinox acquisition of VDM Metals.
Spain's stainless steel industry makes its debut in sustainable finance with the agreement signed between BBVA and Acerinox, the first Spanish company in the industry to link its finance costs to its sustainable commitment. To this end, Acerinox converted an €80 million bilateral loan it had signed in March for the partial financing of the acquisition of VDM Metals. The purchase of this German-based company, a world leader in the production of special alloys, represents a great growth opportunity for Acerinox in new markets.
The financing deal qualifies as sustainable because operating margin will be linked to the performance of two established indicators that will be revised annually: the relative intensity of direct and indirect emissions per ton of steel produced and the frequency of industrial accidents. The independent consulting firm, Sustainalytics, issued confirmation that the deal aligns with the 2019 Sustainability Linked Loan Principles, the framework on which these kind of transactions are based.
This deal demonstrates that the steel industry is taking steps to transition towards becoming more sustainable. Acerinox believes that long-term sustainability is achieved through creating shared and sustained value, for which it is essential to take into account the social and environmental impacts of its business activity. “The strategy to continue advancing with a social and environmental commitment, a strategy driven by the board of directors and management team, is thus plainly evident,” says Bernardo Velázquez, Chief Executive Officer of Acerinox.
Jose Ramon Vizmanos, head of Global Client Coverage at BBVA Corporate & Investment Banking, explains: “BBVA is committed to sustainability and to a positive social and environmental impact, ensuring that corporate profitability today is sustainable tomorrow. This is why we stand shoulder-to-shoulder with our clients during the transition to a sustainable future, including those who, due to the nature of their business activity, have to make even greater efforts.”
BBVA, a leader in sustainable finance
As evidence of its firm commitment to the fight against climate change, in 2018 BBVA announced its Pledge 2025, the initiative through which the bank will secure €100 billion by 2025 for green financing, sustainable infrastructure, social entrepreneurship, and financial inclusion. As of December 31, 2019, it already managed to mobilize 30 billion. The bank has the means, knowledge, and experience to provide its clients with superior advice on sustainable financing solutions and is playing a key role in the development of this market.
BBVA has been a clear leader and dominant player in the sustainable loan business. Today it is one of the most active participants on the world stage in this area, and a leader in Spain. In 2019, the bank led a total of 18 sustainable finance deals in Europe and the Americas for clients across various sectors and was one of the leading companies involved in the sustainable banking market. By the end of May 2020, BBVA had led the way for an additional five deals of this type.