(Bloomberg) — Visa Inc., the world’s largest payments network, is breaking ground by tapping the bond market to fund environmentally friendly projects.
The company is selling $3.25 billion of debt in three parts, according to a person with knowledge of the matter. The shortest portion of the bond offering is a seven-year green note that may yield 0.35 percentage points above Treasuries, after initially discussing around 0.6 percentage points, said the person, who asked not to be identified as the details are private. The $500 million green sale marks the first from the consumer finance sector, according to data compiled by Bloomberg.
The San Francisco-based firm plans to use the proceeds from the green tranche to finance projects that meet eligible categories, including green buildings, renewable energy, sustainable water and wastewater management and projects that support sustainable living behaviors, according to Sustainalytics’ second-party opinion.
Visa said in January that the company reached its goal to use 100% renewable electricity by 2020 through energy sources like solar and wind as part of its sustainability commitment across its operations, including 131 offices in 76 countries and four global processing centers.
Companies and governments have raised about $113 billion in the green bond market this year, a slight decline from $118 billion in the same period last year, according to data compiled by Bloomberg. Meanwhile, sales of bonds to address social issues jumped a record 376% in the first half of the year as issuers ramped up borrowing to tackle the coronavirus pandemic.
Google parent Alphabet Inc. sold $5.75 billion of sustainability notes at record-low rates last week, the largest-ever from a corporation. Investors and Wall Street underwriters, including Goldman Sachs Group Inc. and JPMorgan Chase & Co. expect more Silicon Valley companies to follow Alphabet by issuing environmental, social and governance-linked debt.
“We expect investor focus on material ESG factors to continue to grow rapidly as interest in social factors is on the rise,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note Monday.
Wells Fargo & Co., Bank of America Corp., JPMorgan and Deutsche Bank AG are managing the bond sale, the person said.
(Adds deal size in second paragraph, renewable energy details in fourth paragraph and chart after fifth paragraph.)
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