Pilgrim’s Pride Links Bond Rate to Emissions

March 30, 2021
Pilgrim’s Pride is borrowing $1 billion at an interest rate that will increase if the company doesn’t meet sustainability goals.

Pilgrim’s Pride is borrowing $1 billion at an interest rate that will increase if the company doesn’t meet sustainability goals.

The bond issue for Pilgrim’s Pride, majority-owned by JBS SA, is a “sustainability linked bond.” If JBS doesn’t reduce greenhouse gas emissions by 30% between 2019 and 2030, the interest rate for the 10-year bonds would go up 25 basis points, or 0.25%.

Pilgrim’s Pride and JBS have announced goals of net zero greenhouse gas emissions by 2040. Compliance with the standard for the bond will be determined by a neutral third party.

The bonds, plus cash on hand, will be used to restructure Pilgrim’s debt, lowering the effective interest rate from 5.75% to 4.375%. The $1 billion would be the largest sustainability-linked bond ever issued in the U.S., according to Bloomberg.

“Today’s announcement firmly ties our financial strategy to our long-term commitment to address climate change, the defining issue of our time,” Pilgrim’s CEO Fabio Sandri said in a statement.

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