Burberry exhibits its “first sustainability-labeled bond issued by a luxury fashion company”. It sounds like a contradiction in terms of the fickle fashion world. But the happy rag group that made hot tartan scarves in the 1990s are on the money and ahead of the curve in the UK.
Green is the color of this season and sustainability has become the badge of the day, even in city circles wary of waking up. Bonds intended to finance environmental, social or governance projects fell from 2.8% of the total bond market in the first quarter to 4%, according to the credit rating agency Moody’s, even at a time of debt issuance gigantic.
Burberry’s issue will fund “eligible sustainable projects” such as building energy efficient warehouses and ensuring its cotton comes from the right sources.
Other issuers are moving away from green bonds using the proceeds of the proceeds to shift to less restrictive issues that tie costs to meeting targets. This paved the way for ambitious fundraisers and helped overcome concerns that green bonds are onerous, complicated and expensive.
Alphabet last month launched a $ 5.75 billion durable bond, the largest on record. Germany issued a € 6 billion sovereign green bond – its first – earlier this month to help it go carbon neutral. This week, the European Commission discussed the issuance of green bonds for the first time, as part of its € 750 billion loan to finance the European economic recovery from Covid-19.
Investors are tackling these issues. UBS analysts believe green finance returns have matched traditional bonds while being both more defensive and less volatile during times of market stress.
There is no question of whether Burberry really needs the dosh. He talks about diversifying his capital structure but his link looks more like a tartan accessory. It has net cash, £ 300million of short-term paper issued through the government’s Covid business finance facility and has repaid a £ 300million revolving credit facility.
That said, fashionistas are anything but slaves to necessity.
And what not to like about borrowing £ 300million at 1.125% per annum for five years. British companies have been slower than their climate-conscious rivals in Europe to embrace sustainable finance. UK corporate emissions represent less than 5% of the global total. Burberry could help create a new trend.
Sun loungers about
The regions are all the rage, Cat Rutter Pooley writes. Last week, real estate agents reported a mini real estate boom everywhere except the capital. The Loungers cafe-bar group, which has left London on its own on Wednesday, reported comparable sales up nearly 30% from last year in the 10 weeks after the lockdown was lifted.
Like others in the industry, Loungers owes a great deal to Dishy Rishi Sunak. By removing the effect of its budget catering program and the VAT cut, underlying sales on a like-for-like basis since July 4 are 1.1% lower than last year. Compare that with the sales of the JD Wetherspoon ad group. They were down almost 17% in the 44 days to mid-August. Wetherspoon’s greater reliance on alcoholic beverages, excluded from the Eat Out to Help Out program, probably has something to do with it.
But Loungers’ regional exposure likely helped support sales as well. Pret is the poster child for cuts to restaurants due to its concentration in the capital. The sandwich chain is cutting nearly 3,000 jobs.
The heart of the lounge chairs, on the other hand, is made up of main streets of suburbs, towns and regional urban centers. Exactly, the kind of one-time worker is supposed to spend more time now that the shine is gone from the city.
Loungers’ actions have nevertheless followed those of owner Franco Manca of London since the start of the year. On Wednesday, they climbed 15%.
Regional exposure will continue to matter. Over-expansion comes with dangers, as privately owned, casual restaurant chains have discovered. For now, with cheap leases and less well-capitalized competitors exiting the restaurant market, there is room for the Loungers to expand.
But only so far. President Alex Reilley said that a target of 400 out of 137 lounge chairs today “looks increasingly conservative”. For Lombard, 400 looks like pride.
Rare rough diamond
Petra Diamonds has a rare taste of good news. The miner unearthed five large, high-quality blue diamonds from Cullinan, the South African mine that produced two Crown sparklers a century ago. The company said on Wednesday that discoveries of first-rate blue diamonds were too rare to be analyzed by statisticians.
Petra has sought offers after failing to make payments on a $ 650 million bond this spring. Sadly, Petra says the recent findings are unlikely to have a significant effect on refinancing terms or the likely dilution of future stocks. Shame.
Burberry, Petra: [email protected]
Deckchairs: [email protected]
