Sun Life Financial has successfully completed the public offering in Canada of $750m principal amount of series 2019-1 subordinated unsecured 2.38% fixed/floating debentures due 2029.
Sun Life chief investment officer Randy Brown said the bond, issued on 7 August, has been nine months in the making.
“We knew we had debt that was maturing and needed to be refinanced so the treasury group met with me and we discussed should we do a green bond,” Brown told Insurance Asset Risk. “They took away a project to understand from an issuer perspective what does that really mean.”
Ultimately the group decided to add some social elements in the investments tagged to the bond and opted for a sustainable bond.
The bond was issued at the group level, Brown explained. “But the investments are made at the different subsidiaries, so that money [raised through the bond] is tagged for those investments but is not the actual dollar that is going to those investments.”
The group could also lend the money to the subsidiary to make the investment, although this is still in discussion, he said.
The head of treasury along with Brown will decide on particular investments to tag as supporting the sustainability bond. These investments will be made in a number of categories:
- Renewable energy
- Energy efficiency
- Green buildings
- Clean transportation
- Sustainable water management
- Access to essential services
“In essence it is creating a commitment from us that we are going to go make those $750m in investments that are deemed to be sustainable,” Brown said.
Sun Life took advantage of the low interest rates to issue the bond, he continued. “We actually achieved what I’m told is the lowest coupon in Sun Life’s history, but I can't verify that because Sun Life has a 100+ years history.”
Sustainalytics will provide a second-party opinion on investments tagged to the bond.