(Bloomberg) — Arcos Dorados Holdings Inc., the world's largest McDonald's restaurant operator, plans to make its first bond offering linked to its sustainability goals.
Senior unsecured bonds will be linked to a 36% reduction in greenhouse gas emissions in restaurants and offices and 31% in the supply chain by 2030, according to a statement released on Monday. The bonds will be issued by the subsidiary Arcos Dorados BV, the Buenos Aires-based company reported.
Moody's Investors Service assigned a Ba2 rating to seven- to ten-year bonds. The proceeds will be used to finance a cash purchase offer of approximately US$351 million of Arcos Dorados bonds at 6.625% maturing in 2023 and its 5.875% bonds maturing in 2027, as well as for general corporate purposes.
Arcos Dorados announced the separate repurchase of debt on Monday. The company did not specify the amount it plans to raise in the new debt offering.
Sustainability-linked bonds, or VHL, are becoming increasingly popular because they can be used by a wider group of borrowers, including those without large environmental projects, allowing them to take advantage of a growing industry of ethical funds and obtain cheaper borrowing costs. Global sales amounted to a record $110 billion in 2021, according to data collected by Bloomberg. Barclays Plc estimates that sales of VHL will reach US$235 billion by the end of the year.
VHL can be used for general corporate purposes, provided that issuers commit to meeting certain social or environmental criteria, such as reducing carbon emissions throughout the company.
Arcos Dorados, which describes itself as McDonald's largest independent franchise, is focused on finding ways to reduce greenhouse gas emissions, including plans to replace its vehicle fleet with hybrid or electric vehicles and the creation of stricter programs for its dealers, according to its sustainability-related funding framework released this month.
The franchisee has a moderately negative ESG (environmental, social and corporate governance) credit impact score from Moody's, reflecting the debt rating agency's assessment that ESG attributes are considered to have a limited impact on the current rating, “with greater potential for negative impact future,” Moody's said in a statement Monday.
Original Note:
McDonald's Biggest Franchisee Plans to Debut ESG-Linked Bonds
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