French hotel group Accor SA has said it is focused on a €500 million (expected) unsecured inaugural offer of seven-year sustainability-linked bonds. The announcement follows the conclusion of investor calls on Nov. 16, which engaged more than 100 accounts, according to the company.
Investor feedback suggests a yield in a mid-to-high 2% context, with execution expected as early as Nov. 18, via global coordinators Credit Agricole CIB and HSBC, alongside Commerzbank, MUFG, Santander, Societe Generale and UniCredit. CA-CIB and Santander are ESG structuring advisers.
Proceeds from the offering — which is the company’s first bond transaction since losing its investment-grade rating as a result of the COVID-19 pandemic — are for general corporate purposes, including refinancing the firm’s €500 million of 3.625% bonds due September 2023 and €600 million of 2.25% bonds due January 2024.
The firm announced a tender of the two bond series in a statement released on Nov. 15, with the results to be announced on Nov. 23. CA-CIB is the offerer, CA-CIB and MUFG are structuring advisers, and BNP Paribas, CIC, Natixis and Santander are dealer-managers.
The bond transaction marks a departure from Accor’s previous pandemic-era refinancing strategy, with the group having issued a convertible bond in December 2020 to refinance senior debt.
The group’s last unsecured bond as an IG credit was in February 2019, with €600 million of 1.75% unsecured notes due 2026, which rose to 3% after the trigger of a downgrade step-up in 2020. Those bonds closed on Nov. 16 at a cash price of 104.801, to yield 1.736%, according to S&P Global Market Intelligence data. In October 2019 the firm also issued €500 million of 2.625% hybrid securities, callable in 2025, which closed on Nov. 16 at 96.543.
Ratings are expected to emerge in line with the firm’s existing corporate ratings at BB+/BB+ from S&P Global Ratings and Fitch, according to the company.
The transaction is also the company's first bond linked to key performance indicators, or KPIs, following the publication of its sustainability-linked bond framework on Nov. 15. The SLB step-update depends on two sustainability performance targets that are based on Accor’s KPIs on Dec. 31, 2025. These are linked to the reduction of absolute Scope 1 & 2 greenhouse gas emissions and the reduction of absolute Scope 3 greenhouse gas emissions. Sustainalytics has provided a second-party opinion.
S&P Global Ratings downgraded Accor from BBB- to BB+ on negative outlook in August 2020, citing the impact from COVID-19. Fitch then downgraded the group from BBB- to BB+ on stable outlook on Nov. 27. Fitch affirmed its rating on Nov. 5, noting Accor’s leading market position, worldwide distribution, financial flexibility and solid liquidity headroom.
France-based Accor is the No. 1 hotel operator in Europe.