Marfrig’s transition bond: how fast is fast enough?

The latest idea captivating sustainable finance enthusiasts is transition bonds.

  • By Jon Hay
  • 01 Aug 2019
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Like a second, less green class of green bonds, they would solve the market’s main wrangle — as the EU legislates on what is sustainable, how wide should the market’s perimeter be?

The green bond market could remain tight, while a wider range of issuers used transition bonds.

Sceptics spy a cover for companies moving from brown to light brown — insufficient, considering the urgency of climate change.

This week, the first explicit transition bond has whacked the controversy dial up to 10. The issuer, Marfrig, will use the money to buy cattle from ranchers in the Amazon.

Some green bond aficionados are horrified. Beef is a high carbon atrocity we need to be moving away from, not encouraging — and it is impossible to be sure Amazon beef has not come from deforested land.

Supporters say it highlights Marfrig’s sustained efforts to clean up its supply chain and weed out abusive ranchers.

So is the deal right or wrong? There is no fault in Marfrig or other boundary-stretching companies issuing transition bonds, and they can certainly focus attention on issues.

But that does not mean investors should buy them. Transition bond, like green bond, is just a name. Investors are responsible for which issuers they finance. They must not outsource that responsibility to any external agency or label provider.

If Marfrig is telling the truth — and the fact it has voluntarily opened itself to scrutiny argues for its sincerity — it genuinely wants to be more sustainable.

Whether it is moving fast enough, or can ever get on a path consistent with 1.5C of global warming, every investor must judge for itself.

  • By Jon Hay
  • 01 Aug 2019

All International Bonds

Rank Lead Manager Amount $b No of issues Share %
  • Last updated
  • Today
1 JPMorgan 327.88 1495 8.47%
2 Citi 300.87 1281 7.78%
3 Bank of America Merrill Lynch 257.92 1081 6.67%
4 Barclays 234.22 962 6.05%
5 HSBC 189.93 1042 4.91%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $b No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 37.08 171 7.23%
2 Credit Agricole CIB 35.71 154 6.96%
3 JPMorgan 29.35 74 5.72%
4 Bank of America Merrill Lynch 24.21 68 4.72%
5 SG Corporate & Investment Banking 23.67 111 4.61%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $b No of issues Share %
  • Last updated
  • Today
1 JPMorgan 10.13 66 9.88%
2 Morgan Stanley 9.41 44 9.17%
3 Goldman Sachs 8.72 45 8.50%
4 Citi 6.74 52 6.57%
5 UBS 5.32 30 5.19%