New World, DBS in Hong Kong's first rate swap tied to UN green goals

Finance | Staff reporter 1 Dec 2020

Property giant New World Development and DBS Hong Kong have completed the first interest rate swap in Hong Kong linked to United Nations-mandated sustainability goals.

The deal is designed to hedge against interest rate risk related to a HK$1 billion sustainability-benchmarked loan that New World secured from DBS last year. It will see the bank sponsor the developer's UN sustainable development goals-focused start-up integration programme, Impact Kommons, through a further phase of operations involving its third batch of start-ups if the programme yields eight business integrations that support the UN sustainable development goals (UNSDGs).

The completion of the rate swap arrangement follows the launch of the world's first sustainability improvement derivative - also a rate swap - by Netherlands-based lender ING last year, and adds to a range of financial incentives for companies taking out loans to bring their practices into line with the UN targets, which were agreed in 2015.

Adrian Cheng, New World's executive vice-chairman and chief executive officer, said: "New World Group is committed to connecting business success with social progress and environmental solutions by promoting the UN's sustainable development goals. We also believe in the power of partnerships to accelerate change, and that is why we have enlisted the support of DBS. With the winning combination of our resources and their expertise in financial innovation, we are joining forces to create shared value for the long-term well-being of society."

Last month, in a sign of growth in the market for such arrangements, Singapore launched a scheme to improve access to sustainability-linked financing, while Goodman Interlink and Credit Agricole-CIB set up the first green interest rate swap in Asia-Pacific in a deal involving HK$590 million.

Alex Cheung, DBS Hong Kong's managing director and head of institutional banking, said the bank was committed to promoting sustainable development and accelerating action on climate change, and that he also looked forward to further deals linked to sustainability goals in the future.

"This ground-breaking transaction reaffirms our commitment to work with New World Development and other like-minded partners to build a sustainable future through innovation and collaboration," he said.

The UNSDGs aim to address a range of social needs such as education, health, social protection and job opportunities, while battling climate change and boosting environmental protection.

New World and DBS are both signatories to the United Nations Global Compact, a voluntary initiative based on CEO commitments to implement universal sustainability principles and toreport on their implementation.

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