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Green Finance / Treasury & Capital Markets
Standard Chartered signs HK sustainability-linked credit facility
Transaction with FX hedging option supports Leo Paper Group’s zero-waste ambition
The Asset 13 Apr 2022

Standard Chartered Bank has agreed to provide a sustainability-linked USD trade finance credit facility and a sustainability-linked hedging arrangement for Hong Kong-based printing company Leo Paper Group.

This is the first time Leo obtains a sustainability-linked trade finance credit facility for its use across Hong Kong, mainland China and Vietnam, and also the first time it uses a sustainability-linked hedging transaction to manage foreign exchange risks.

Under the deal, Leo commits to reduce its hazardous waste and total waste intensity to pre-determined levels over a designated period of time. Standard Chartered Bank will provide financial incentives to Leo if the targets are met, whereas a penalty will be imposed on unfulfilled commitment.

Helen Hui, managing director, head of client coverage, corporate, commercial and institutional banking, Hong Kong, at Standard Chartered, says: “Through our expertise, we are pleased to support Leo’s aspiration to become a ‘zero-waste factory’, together creating a better future for the next generation.”

John Thang, head of financial markets, Hong Kong and Greater Bay Area, at Standard Chartered, adds: “This is the first time we executed a sustainability-linked FX option for a client in Hong Kong. We expect more similar deals to come as clients are increasingly looking for innovative sustainable finance products, not only for financing but also for hedging.”

Sustainable debt issuance, including both loans and bonds, in Hong Kong grew to US$20.56 billion last year, from US$770 million in 2017.  Green assets in the bank’s Hong Kong portfolio amounted to US$552 million in mid-2021, up from US$34 million a year ago, representing a 16-fold growth.

Standard Chartered plans to mobilize US$300 billion globally for green and transition finance by 2030.

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