The Thai-listed firm Precious Shipping Public Company Limited (PSL) has printed a 1.36 billion baht (US$40.48 million) sustainability-linked bond (SLB) on the back of a guarantee extended by the Asian Development Bank’s Credit Guarantee & Investment Facility (CGIF) that represents the first-ever such bond issued by a shipping company from the Association of Southeast Asian Nations (Asean) region.

The dual-tranche offering was equally split at 680 million baht each for five and 10 years. The tenors enabled PSL to effectively lengthen its debt maturity profile, in addition to diversifying its funding sources and reducing its reliance on bank loans. The SLBs were privately-placed with institutional investors and high-net-worth individuals, and issued under the Asean+3 Multi-currency Bond Issuance Framework.

As the first-ever SLB from an Asean shipping company, the transaction represents a significant milestone with the goal of reducing the carbon dioxide emissions per transport work by at least 38.54% by 2034. Such an initiative, the company says, supports ongoing global efforts to combat climate change.

By focusing on per transport work efficiency, PSL states that it “is demonstrating its commitment to sustainable operations while maintaining productivity, which extends beyond the objectives set by the International Maritime Organization aimed at promoting environmentally responsible shipping practices”.

The Asian Development Bank supported PSL in the development of its sustainability-linked finance framework, which aligns with the Asean Capital Markets Forum, the Asean Sustainability-linked Bond Standards, as well as the International Capital Market Association’s Sustainability-linked Bond Principles, as verified by a second-party opinion from Lloyds Register. UOB (Thai) acted as the lead underwriter for the transaction.

In extending the guarantee to PSL, CGIF CEO Hongwei Wang notes PSL’s commitment to operational efficiency and sustainable practices in the global dry bulk shipping sector through its issuance of the SLB aimed at carbon emission reduction. “This transaction,” he says, “aligns with CGIF’s mandate to promote local currency bond issuances across Asean and underscores our commitment to sustainable financing.”

Khalid Hashim, PSL’s managing director, adds: “Through our SLB issuance, we commit not only to raising capital but also to achieving measurable carbon emission reduction and social impacts that align with our long-term sustainability strategy.”

Founded in 1989, PSL is a dry cargo shipowner in the tramp freight market that operates in the Handysize, Supramax and Ultramax sectors, and transports commodities such as grains, cement, fertilizers, ores, coal, logs and steel globally. As of December 31 2023, it operates a fleet of 38 dry bulk vessels, including four cement carriers, totalling 1.6 million deadweight tonnage.