Eversheds Sutherland advises BNP Paribas on another Sustainability-Linked Loan

BNP Paribas and Metropolitan Thames Valley Housing Association sign £50m Sustainability-Linked Loan

Eversheds Sutherland’s Governments and Infrastructure Team has advised BNP Paribas on a £50m sustainability-linked revolving credit facility with Metropolitan Thames Valley Housing Association (MTVH). The three-year facility is believed to be the first Risk Free Rate sustainability-linked loan in the housing association sector.

Under the facility, MTVH will benefit from a reduced interest rate if it achieves pre-agreed environmental targets of reducing greenhouse gas (GHG) emissions linked to energy consumption from its offices, residential portfolio and transport use.  The facility is also particularly notable for its move away from LIBOR and aligns multiple interest rates to SONIA at day one rather than transitioning subsequently with an LMA-style rate switch.

Eversheds Sutherland’s advice on this transaction follows a five-year £50 million revolving credit facility to Optivo Housing Association where the interest rate is tied to Optivo meeting social impact-based key performance indicators.  In that sustainability-linked loan, Optivo benefits from a reduction in the interest rate if they deliver an agreed number of unemployed residents into work or work-based programmes.

Both facilities include options to extend the amount and duration of the finance.

Eversheds Sutherland’s team included Mark Dennison, Partner, Governments & Infrastructure; and Holly Suthren, Principal Associate, Energy and Infrastructure Finance.

Mark Dennison, Eversheds Sutherland, said:

“Whereas just a year ago sustainability-linked loans were more of an exception to the norm, 2020 saw a marked increase in the number and scale of organisations looking to integrate sustainable principles with conventional finance.  We congratulate BNP Paribas in playing a leading role in this transition.”

Anne Marie Verstraeten, BNP Paribas UK Country Head

“MTVH has demonstrated that funding structures, commercial strategy and the demands of the climate crisis need not be at odds. As an active member of the Coalition for the Energy Efficiency of Buildings, BNP Paribas knows that decarbonising the built environment is essential for achieving net zero in the UK. In MTVH we found a partner whose understanding matches our own.”