OCBC executes sustainability-linked currency swap with Cromwell European REIT

OCBC building in Signapore’s central business districtOCBC building in Signapore’s central business district. Photo taken pre-Covid.

OCBC Bank has executed a sustainability-linked cross-currency swap with Cromwell European REIT, providing better rates if green targets are met, the two entities said in a filing to SGX Friday.

Under the deal, a five-year structured derivative transaction will hedge the currency risk from Cromwell European REIT’s S$100 million fixed-rate subordinated perpetual securities issued in November, the filing said.

The hedge will let the REIT convert the Singapore dollar proceeds to euro at a cheaper rate for the duration of the swap, the filing said.

In addition, the REIT will receive better rates if it meets two targets: Attaining a targeted rating under the Global Real Estate Sustainability Benchmark (GRESB), and obtaining a certain number of green building certifications for portfolio properties each year, the filing said.

The targets will rise by a preset percentage each year as part of OCBC’s move to motivate its clients to reach higher environment, sustainability and governance (ESG) standards, the filing said.

Simon Garing, CEO of Cromwell European REIT’s manager, said the sustainability component of the swap reinforces the REIT’s commitment to sustainability standards in its operations.

“After transacting a cross-currency swap into our functional currency of euro, the coupon in euro provides attractive funding, further diversifying CEREIT’s capital sources enabling it to fund new acquisitions on an accretive basis,” Garing said in the statement.