MUFG has acted as Active Bookrunner on a EUR 750million bond issue for Tesco plc*, the major UK headquartered food retailer. The transaction is the first sustainability-linked bond to be issued by a retailer, and reached successful close in January 2021 with an order book approaching EUR 5 billion.

Tesco was the first business globally to set a zero-carbon goal in 2009 and later the first FTSE100 company to set science-based carbon reduction targets on a 1.5-degree trajectory. This bond further demonstrates the strength of Tesco's commitment to reduce its impact on the environment and become a net zero carbon business in the UK by 2035, an initiative we are proud to support this key client with achieving.

This milestone bond follows the announcement in October 2020 that Tesco had established a GBP 2.5 billion revolving credit facility, with interest linked to the achievement of three ambitious environmental targets. MUFG was a Mandated Lead Arranger on the RCF.

The bond, issued with a 0.375% coupon and an 8.5-year maturity, is aligned to Tesco's newly introduced Sustainability-Bond Framework which follows the ICMA Sustainability-Linked Bond principles and has been independently assessed by Sustainalytics.

Concurrent with the new Bond Issue, Tesco also completed a Tender Offer on a series of existing bonds denominated in EUR, GBP, and USD. This facilitated a broadly cash neutral transaction which also allowed investors to switch into the new bonds. MUFG was a Dealer Manager on the Tender.

Simon Lello, Managing Director at MUFG EMEA, said:

"The whole MUFG team is delighted to have been involved in this landmark transaction which resonates strongly with our own ESG objectives and principles. We work with Tesco across a range of different areas, but this deal is particularly special as it was not only a fantastic result, but is a first for the client and a first for the sector more widely."

* Tesco launches first sustainability-linked bond of €750m