Dive Brief:
- CMS Energy, the parent company of Consumers Energy, announced Wednesday that it has new $1.4 billion revolving credit facilities that come with a unique twist — the company is able to reduce its interest rates through the addition of more renewable energy.
- Barclays, J.P. Morgan, MUFG, Mizuho and BofA Merrill Lynch acted as joint lead arrangers. Barclays also acted as the sustainability structuring agent. According to CMS, these are the first syndicated sustainability-linked revolving credit facilities for a U.S. borrower.
- In a Form 8-K filing with the Securities and Exchange Commission, CMS told regulators the financial arrangements included a "sustainability-linked pricing metric." Company officials say they want to see sustainability linked to financial results.
Dive Insight:
Advanced energy and finance are becoming increasingly linked as sustainability concerns grow. CMS says the arrangement is unique, but more could be in the works.
"A credit facility is a type of loan made in a business or corporate finance context, including revolving credit, term loans, committed facilities, letters of credit and most retail credit accounts," According to Investopedia,
The $1.4 billion in this case is in two credit facilities between CMS Energy and Consumers. Both have five-year terms that expire on June 5, 2023, each with one-year extension options.
CMS has announced several clean energy goals this year, including phasing out coal, reducing carbon emissions 80% and meeting a renewables standard of 40% by 2040. The company also has five-year environmental goals, including saving 1 billion gallons of water and reducing waste to landfills by 35%.
Exactly how it will meet those goals will be revealed in the utility's integrated resource plan, which is due to regulators next week.
