TELUS Corp.
(T-T, TU-N) C$27.73 | US$22.45
TELUS Prices Sustainability-Linked Bond Event
Last night, TELUS announced the pricing of a $750 million senior unsecured Sustainability-Linked Bond (SLB) with an effective yield of 2.878% and 10-year maturity (press release is here: link). The SLB issued implies a 3bps discount to their traditional bond spread, assuming no penalties for not being able to meet their ESG targets (see details below).
Impact: NEUTRAL
TELUS had initially announced the framework of its SLB on June 14, which links its financing to its operational goal of net carbon neutrality by 2030. Included in the framework, TELUS has committed to reduce its greenhouse gas (GHG) emissions by 46% versus its 2019 levels by 2030. If for any reason, TELUS does not meet its commitments by December 31, 2030, there will be a penalty to TELUS with the interest payable increasing by 100bps per annum. TELUS notes that the targets it has set out for itself in the framework are approved by the Science Based Target initiatives (SBTi), a partnership between the CDP, United Nations, World Resources Institute, and the WWF with a goal to combat climate change and global warming.
The bond offering illustrates the continued ESG leadership at TELUS by way of the first sustainability-linked bond issue in Canada. Furthermore, the bond offering is also beneficial from an economic perspective given the 3bps spread saving. With the increasing focus on ESG, we believe that the SLB issue can only help TELUS to screen better for investors with a focus on ESG without sacrificing the economics to the business.