Burberry raises new funds to boost sustainability drive
Many companies are raising cash at present but this week, Burberry has taken a new approach to doing do and tapped debt markets for the first time in its history but in a way that focused on ethics and sustainability.
It launched a sustainable bond to help its liquidity, but also stressed that the money will be ring-fenced to be used to boost its eco drive.
As well as being the first sustainability-labelled bond issued by the company, it’s also a first for a luxury business.
The company has a heavy focus on ethics and sustainability. Since a scandal in 2018 that showed it was burning tens of millions of pounds worth of unsold stock, it has doubled down on its eco activities and this bond adds to that process.
Burberry said it will diversify the firm’s sources of funding, "introducing long-term financing into the company’s capital structure".
The business has applied to be rated by Moody’s and expects the bond to be rated Baa2 (Stable Outlook).
But is this a sign of a company in dire need of cash? Not really. The company said it “has a conservative capital allocation policy and already holds substantial liquidity”.
Following the outbreak of Covid-19, earlier in the year, it drew down its £300 million revolving credit facility (RCF) and issued £300 million of short-dated commercial paper under the Bank of England’s Covid Commercial Financing Facility (CCFF), with a maturity in March 2021. The RCF drawings were repaid in full in the first quarter of its latest financial year.
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