Coca-Cola FEMSA Issues US$705 Million Green Bond

Coca Cola FEMSA, the Mexican multinational retail and beverage company that runs the world’s largest Coca-Cola bottler, has issued a 12-year green bond in the international capital market with a value of US$705 million, the largest in history for any company in Latin America. According to a source involved in the deal, the value was reached after increased demand raised the preceding proposal of US$500 million, LatinFinance writes. The company prized the bonds at 99.604 with a coupon of 1.85% or 120 basis points over US treasury notes. According to Coca-Cola FEMSA, the transaction has attracted broad participation from investment grade investors. The closing of the transaction and the issuing of the green bonds are expected on Sept. 1, 2020, subject to the usual closing conditions for these types of transactions.

The company hopes that the bond will help to reach its environmental and sustainability goals in different areas. “This green bond is consistent with our goal of refreshing our consumers anytime, anywhere, in a sustainable way, while continuing to generating economic value and contributing positively to society and the environment. We hope that this transaction will allow us to achieve our environmental goals and contribute to the UN’s Sustainable Development Goals,” stated John Santa Maria Otazua, General Director of Coca-Cola FEMSA.

The company will allocate resources in the following areas:

1. Climate change: On June 11, 2020, Coca-Cola FEMSA became the first Mexican company to be approved by the global Science Based Targets (SBTi) initiative regarding its greenhouse gas reduction goals. This adheres to the Paris Agreement to avoid climate change, seeking to limit the increase in global temperature to well below 2°C above pre-industrial levels. The company plans to reach its commitment by 2030, reducing its greenhouse gas emissions by 28 percent compared to 2015.
2. Water care: Having set a benchmark for water use of 1.52 liters of water per liter of beverage produced in 2019, the company is hoping to return the same amount of water it uses in its beverage production through initiatives such as the Latin American Fund Alliance of Water and local associations.
3. Circular economy: As part of the “A World Without Waste” initiative, Coca-Cola FEMSA states it is committed to using 50 percent of recycled resin in its PET bottles and to collect 100 percent of the containers that are placed on the market by 2030. In addition, the company is working to close the bottle-to-bottle cycle by developing its own infrastructure and sharing it through partnerships with other stakeholders. At the moment, it is meeting its collection commitment at 50 percent in its main markets, as well as using an average of 23.7 percent recycled resin in PET bottles.

Together with its green bonds, the company published a Green Bond Framework, which it says is aligned with the four core components of the 2018 Green Bond Principles administered by the International Capital Market Association (ICMA). The company has also obtained an independent opinion from Sustainalytics in accordance with industry best practices.