AUSTRALIA: Sydney suburban rolling stock PPP concessionaire Reliance Rail has refinanced its bank debt facilities with a A$1·8bn 21-year Green Sustainability-Linked Loan.
Reliance Rail’s 2006 contract with the New South Wales government covers the supply and maintenance of 78 Waratah EMUs, which account for about a third of Sydney Trains’ suburban fleet, along with the operation of the purpose-built Auburn depot. Reliance Rail is now operating in the ‘through-life support’ phase of the contract which runs until at least 2044.
Announcing financial close on March 1, Reliance Rail said the refinancing was one of the first of its kind in the Asia-Pacific market to be certified as a Green Loan by the Climate Bonds Initiative under its Low Carbon Transport criteria, as well as being a Sustainability-Linked Loan. CEO Chad Smithies suggested that the initiative could ‘pave the way for other mature infrastructure projects to pursue similar transactions.’
The loan structure incentivises Reliance Rail with reduced debt margins if Sustainability Performance Targets are met. These are aligned to four metrics: an Infrastructure Sustainability Council Operations Rating score; the energy intensity of the trains and depot; solar power generation at the depot; and operational water consumption. Any savings would be used to fund sustainability improvements rather than to reduce the net funding costs.
Reliance Rail’s long-term equity investors are AMP Capital and the Amber Infrastructure-advised International Public Partnerships.
The green loan is being supported by 12 participating lenders: BNP Paribas, Commonwealth Bank of Australia, DZ Bank, Industrial & Commercial Bank of China, Kookmin Bank, Mizuho Bank, National Australia Bank, Natixis, Nippon Life, Norinchukin, Sumitomo Mitsui Trust Bank and Westpac.
BNP Paribas, Commonwealth Bank of Australia and National Australia Bank acted as Joint Sustainability Co-ordinators and worked to structure the SPTs. DNV acted as Verifier and Second Party Opinion provider.
RBC Capital Markets acted as financial adviser. King & Wood Mallesons acted as legal advisers for the borrowers, and White & Case for the lenders.