Pacific Basin Secures $250M Sustainability Loan to Advance Green Shipping Goals

Pacific Basin Shipping, the world's largest operator of dry bulk ships, has completed its second sustainability-linked loan, continuing its environmental and financial dedication. The Hong Kong-listed company received a $250 million seven-year senior secured committed revolving credit facility, which it will utilize for general corporate purposes. This new facility comes on the heels of an earlier similar $150 million facility raised in December 2023.

This funding framework has a graduated rate regime, in which interest margins are linked to the firm's performance against certain listed sustainability targets. These are reducing carbon intensity on its fleet and enhancing onboard crew safety levels, both of which are fundamental objectives within the shipping industry as a whole in its pursuit of compliance with environmental and social requirements.

In order to validate the targets, Pacific Basin asked Moody's Investors Service for a second-party opinion. Moody's took into account the SPTs and KPIs of the company and validated their alignment with long-term environmental objectives, such as a 2050 net-zero emissions target. The targets also allocated enhanced seafarer wellbeing and seafarer safety, as greater emphasis is now placed on social responsibility in maritime enterprise.

The competitive pricing of interest and loan oversubscription are a reflection of investors' faith in Pacific Basin's growth strategy and sustainability pledge. The funding is not only destined for the perpetuation of ongoing operations but also to finance future growth of fleet in harmony with global decarbonisation targets.

Earlier this year, Pacific Basin formed a Sustainability Committee at the board level. This regulatory step is aimed at furthering its strategic decision-making in line with long-term environmental and social goals, promoting internal accountability on sustainability projects.

Aside from its financial approach, the company has embarked on cleaner fuel development. It recently signed a Memorandum of Understanding (MoU) with Hong Kong and China Gas Company Limited (Towngas). The deal provides a basis to secure a long-term green methanol supply, a low-emission maritime fuel, which will allow the company to run dual-fuel and low-emission ships in future years. Green methanol is becoming increasingly popular as an intermediate fuel because it has a lower carbon intensity than traditional fuel supplies and can be handled using current engine technology.

The investment in green fuel infrastructure and the financing based on sustainability take Pacific Basin side by side with industry players in actual steps toward compliance with international shipping decarbonisation regimes, like the International Maritime Organization's (IMO) goals.

As the shipping sector continues to come under pressure to decarbonise, operators are looking more and more to new financing tools such as sustainability-linked loans to finance their transitions. These structures incentivise concrete environmental performance, so making sustainable operations pay. Pacific Basin's strategy reflects the increasing trend towards linking financial success with environmental and social responsibility in shipping.

With the world's attention turning to ESG-investments and green finance, Pacific Basin's choice here follows the broader industry trend. With the rising fuel and regulatory costs paralyzing the conventional shipping routes, those companies which invest early in cleaner fuels and stronger governance mechanisms will be able to remain in business.

Through the synergy of financial solutions, compliance, and alternative fuels, Pacific Basin is developing a sustainable model of how mature industries could be transformed into sustainable businesses without jeopardizing business resilience. The loan is going to be structured to not only help achieve net-zero aspirations but enhance the resilience of the company amid changing economic and regulatory conditions.

Source: Offshore Energy
Credits: KnowESG