Debt facility assists underprivileged populations
CBA has introduced a social loan in partnership with APM Human Services International, a global human services and healthcare organisation.
The social loan is a bespoke product, available to institutional and corporate customers, the bank said.
An official first for the Australian market, Australia’s biggest bank said social loans were a type of sustainable finance product. Proceeds are used to support projects and activities that address a social issue or achieve positive outcomes for certain populations, particularly underserved, marginalised and vulnerable groups.
APM’s social loan is aligned with Asia Pacific Loan Market Association (APLMA) social loan principles, CBA said. The criteria cover employment generation, access to essential services such as health and healthcare, and socioeconomic advancement and empowerment.
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The net proceeds from the loan would be used to finance or refinance funds related to delivering social services by APM to a range of target populations. These include people with disabilities, the unemployed and vulnerable groups.
CBA managing director future cities and networks Michael Thorpe (pictured above left) said APM’s key business focus was to deliver “social good”.
“We’re delighted to have worked with APM to develop an innovative sustainable finance solution to help recognise the important social contribution APM makes to communities in Australia and internationally,” Thorpe said.
CBA managing director sustainable finance and ESG Charles Davis (pictured above right) said a use of proceeds loan (such as a social loan or green loan) enabled a company to identify and highlight to its lenders and broader stakeholders, the positive social or environmental outcomes that they were aiming to achieve through use of the funds.
One of the possible outcomes was greater interest from lenders or investors in a deal, and subsequently, potential pricing benefits, he said.
“Green and social loans can be available to a range of institutional and corporate clients who are able to demonstrate that funding is being used for projects or assets that align with the relevant APLMA Principles (such as the social loan principles),” Davis said.
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The loan is a syndicated debt facility of $840 million, taken out by APM.
“CBA worked closely with APM to ensure the social loan was aligned to the APLMA social loan principles, showing proceeds are allocated to eligible social projects targeting specific populations,” Davis said.
CBA said it acted as sole coordinator of the social loan and was a key lender to the $840 million social loan facility. The loan received a Second Party Opinion by DNV confirming the alignment and the subsequent credibility of the structure.
