“Brazilian Company Suzano Bets the Bond Market on Emission Cuts” – The Wall Street Journal – September 3, 2020

On September 3, 2020 The Wall Street Journal reported that “(a)s Brazil struggles with deforestation, one of the country’s largest paper manufacturers is pitching investors a bond that will cost the company money if it fails to meet greenhouse gas-reduction targets.

The new type of security from Suzano SA is part of an evolution in the green bond as companies and nations look for new ways to fund themselves by tapping into rising demand for investment products that further environmental, social and governance, or ESG, objectives.

Suzano also hopes the bond will help distance the company’s image from the accelerating destruction of Brazil’s rainforest under the administration of President Jair Bolsonaro.

‘It’s an important step to show we have skin in the game, especially in this moment,’ said Suzano Chief Financial Officer Marcelo Bacci. ‘The fires and deforestation are caused by criminals, and we want to make sure that everyone understands that Suzano has a completely different story.’

Suzano will hold meetings with institutional investors next week to market a sustainability-linked bond, the first such deal in Latin America, people familiar with the matter said. The deal, which was structured by JPMorgan Chase & Co., is expected to raise $500 million to $1 billion and proceeds will be used to repay existing debt, they said.

Rarely used five years ago, so-called green bonds have grown mainstream with Germany issuing about €6 billion ($7.1 billion) of the securities this week. Sustainability-linked bonds are the next-generation securities Wall Street is offering environmentally and socially conscious investors.”

You may read the article on The Wall Street Journal internet site.