Tata Comm taking sustainable route for $1 billion fundraising goal
Tata Communications is going the sustainable way when it comes to raising funds, with the telecom company hiring Bank of America (BofA) to advise it for a financing framework which aims to unlock access to funds of around $1 billion over the next two years.
The bank is advising the Tata Group company on a Sustainability-Linked Loan (SLL) framework which introduces targets related to environmental, social and governance (ESG) standards for fundraising, people aware of the developments told ET.
The funds which Tata Communications aims to raise under the framework — around $1 billion — would be used for refinancing existing loans as well as structuring fresh loans, the people said. Adherence to the SSL targets typically brings a pricing benefit, in the form of a lower rate of interest. Missing the targets results in a higher interest.
«Effectively, Tata Communications is being advised by Bank of America for the SLL framework. The concept, which is in line with global investor expectations, is to link loans to two or three global sustainability pillars,» one of the people said.
«Typically, the pricing benefit for such loans is in the region of 5-15 basis points, while missing a stipulated target would mean that the interest rate on the loan goes up by a similar quantum,» the person said.
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Emails sent to Tata Communications and Bank of America seeking comment on the matter did not receive any response till the time of going to
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