Brazilian car rental company Movida has hired Milbank in São Paulo and New York and Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados in São Paulo to raise US$500 million in a sustainability-linked bond issuance, which also marks the company’s first international debt tap.

The underwriters enlisted the São Paulo and New York offices of Cleary Gottlieb Steen & Hamilton LLP and Brazil’s Machado Meyer Advogados.

The 10-year bonds carry a 5.25% interest and were issued under the company’s sustainability-linked financing framework, which it adopted in January. The bonds are linked to specific emission reduction targets set out by Movida. If the company fails to hit those targets by 2025, the bonds’ interest will increase to 5.5%.

Movida’s framework adheres to the sustainability-linked bond principles developed by the International Capital Market Association.

The issuance was made through the company’s Luxembourg-incorporated subsidiary on 8 February.

The deal took place shortly after Movida’s parent organisation, Simpar, a Brazilian logistics group, issued US$625 million worth of its own sustainability-linked bonds. That deal closed in January, with the same four firms involved.

Movida provides car rental and vehicle fleet management and outsourcing services in Brazil. It is one of six independent entities controlled by Simpar, all of which operate in the logistics and transports sectors.

Several Brazilian companies have launched sustainability-linked bond issuances. Paper giant Suzano was first in September 2020, raising US$750 million, following up with a second issuance two months later. Since then, counterpart Klabin has raised funds from sustainability-linked bonds, as has Brazilian beauty products distributor Cálamo Distribuidora De Produtos De Beleza.

Sustainable debt sales have not only exploded in Brazil, but in Latin America more broadly. In a report published by Bloomberg earlier this week, data shows Latin American companies have raised some US$8.7 billion in debt tied to environmental, social and governance (ESG) projects so far in 2021. That is not far behind the US$10.8 billion issued during all of 2020.

Counsel to Movida

  • Milbank: Partner Tobias Stirnberg and associates Alexia Raad and Mateus Costa-Ribeiro in São Paulo, and partners Andrew Walker and Catherine Leef Martin, and associates David Hanno and Samantha Rocco in New York
  • Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados: Partner Frederico Kerr Bullamah and associates César Matteus Rizzo da Silva, Gabriella Di Tommaso Latorre and Luís Felipe Oliveira Haddad in São Paulo

Counsel to Citigroup, JP Morgan, Morgan Stanley, BTG Pactual, Itaú BBA, Santander, UBS Investment Bank and XP

  • Cleary Gottlieb Steen & Hamilton LLP: Partner Juan Giráldez and associate Luisa Franciss Galliez in São Paulo, and international lawyer Rosane Carmona in New York

(Latin Lawyer - 12.03.2021)