While many financial institutions are issuing green bonds, Sun Life Financial is the first insurance company globally to issue a sustainability bond, which will cover investments in both green assets and other assets serving a broader social purpose.
On Wednesday, Sun Life announced it’s issuing a $750 million principal amount of Series 2019-1 subordinated unsecured 2.38 per cent fixed/floating debentures due in 2029 in Canada.
“We’re really pleased with the pick-up,” says David Mathews, the firm’s assistant vice-president of capital markets and rating agencies, noting the bond is oversubscribed and two-thirds of the $750 million was allocated to ESG-focused firms.
The sustainability bond will potentially cover investments focused on accessing essential services, facilities and equipment that contribute to the long-term health of communities such as infrastructure investments in hospital or childcare centres.
Other projects eligible under the framework could include investments in projects related to renewable energy, energy efficiency, green buildings, clean transportation and sustainable water management projects.
“The way the framework has been established is that it allows us to look to investments that were already on our books looking back two years, or we could look forward . . . to new investments that will come into our books in the next 18 months,” says Mathews.
The announcement comes after Sun Life published a sustainability bond framework in March.
“We’ve created this sustainability framework to give us capacity to issue more securities in the future,” says Mathews.
Sun Life has committed to providing investors with a report one year from the date of issuance that will detail the assets supporting the bond and their impacts.
“You won’t see that for a year,” says Mathews. “But we are committed to providing as much transparency as possible on that.”
The offering for the sustainability bond is expected to close on Aug. 13, 2019.