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January 18, 2022updated 21 Jan 2022 1:04pm

Knorr-Bremse adds sustainability in new financing

New credit facility is tied to an ESG rating by an external ratings specialist.

By David Leggett

Knorr-Bremse AG has just concluded its first-ever syndicated loan with an added sustainability component included.

The syndicated loan of EUR 750 million has a term of five years and can be extended by one year up to two times. Knorr-Bremse has tied the new financing to an ESG rating by ISS ESG, who currently has Knorr-Bremse AG at a rating of C+. Within the framework of a bonus–malus system, changes to this rating have a corresponding positive or negative impact on the loan spread.

The transaction was coordinated by Deutsche Bank and UniCredit.

Frank Markus Weber, Chief Financial Officer of Knorr-Bremse AG: “With this syndicated loan, we are expanding the tools at our disposal for long-term financing and modifying our previous strategy, which was characterized by short-term bilateral credit lines combined with long-term capital market instruments. We have thus secured ourselves credit over the long term in an attractive market environment and, with this ESG-linked loan as a green financing element, have taken up a sustainable instrument into our financing structure.”

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