Pacific Basin closes sustainability-linked loan

Pacific Basin Shipping Limited, a Hong Kong-listed player in dry bulk shipping, has concluded its $150 million sustainability-linked 3-year senior unsecured committed revolving credit facility.

This signifies Pacific Basin’s first foray into sustainability-linked loan facilities, the company said, adding that it would use the loan for general corporate purposes.

“This facility enhances our financial capacity, diversifies our funding profile, and emphasizes our commitment to sustainable shipping. The facility’s unsecured profile, competitive pricing, and oversubscription are indicative of market support for Pacific Basin and its ESG initiatives,” Martin Fruergaard, CEO of Pacific Basin, said.

BNP Paribas and Citigroup Global Markets Asia Limited served as the joint coordinating mandated lead arrangers and bookrunners, as well as joint sustainability coordinators for the facility. The facility includes participation from Hong Kong and Shanghai Banking Corporation Limited, Iyo Bank Limited, SBI Shinsei Bank Limited, and Skandinaviska Enskilda Banken AB (publ).

The facility aligns with Pacific Basin’s corporate sustainability agenda, featuring a tiered pricing mechanism. Interest margin adjustments are tied to predetermined key performance indices (KPIs) based on annual sustainability performance targets (SPTs”. The chosen KPIs address environmental and social aspects in the industry, focusing on carbon intensity and crew safety, aligning with key ESG priorities for Pacific Basin.

Pacific Basin has been actively collaborating with Nihon Shipyard Co. and Mitsui & Co. in the design of efficient dual-fuel vessels that can run on both fuel oil and sustainable methanol. However, the company remains cautious in its approach to investment in newbuildings due to the current high prices.

To ensure growth and the renewal of its core fleet, Pacific Basin has signed agreements for the long-term inward charter of both Handysize and Ultramax vessels. The company has already taken delivery of one long-term time-chartered Japanese-built 39,650 dwt Handysize newbuilding in July and expects the delivery of two Japanese-built 40,000 dwt Handysize newbuildings in November and December 2023.

Furthermore, Pacific Basin has secured additional long-term charter agreements for four Japanese-built 40,000 dwt Handysize newbuildings with scrubbers, scheduled for delivery in the first quarter of 2025.