GM is selling green bonds first in hopes of challenging Tesla in EVs

General Motors sold eco-friendly bonds for the first time, joining its competitors in tapping the permanent debt market to fund the transition to EVs to compete with Tesla.

According to a person with knowledge of the matter, the automaker negotiated $2.25 billion worth of green bonds in two parts. The longest part of the offering, the 10-year security, is 2.95 percentage points higher than comparable Treasuries, up 3.2 percentage points after initial discussions, said the person, who asked not to be identified as the details, are private. .

At $2.25 billion, it is the second-largest green deal for a US corporation outside the financial sector, according to data compiled by Bloomberg.

Marcus Martin, ESG’s head for commercial products at US Bancorp, said in an interview, “Not only for the future of automakers, but for transportation more broadly, the likes of GM should come to market with green bonds.” It’s great to see.” Thursday at Bloomberg headquarters in New York.

Companies and governments have borrowed $264 billion in the global green bond market so far this year, down 5.3 percent from the same point last year, according to data compiled by Bloomberg. Top Wall Street debt underwriters, however, see a sustainable boom in all things environmental, social and governance in the second half of the year.

GM expects to allocate net proceeds from this offering specifically to clean transportation solutions, including investments in the design, development or manufacture of clean transportation technology and enabling solutions, said a person with knowledge of the matter.

Ford Motor Co., Toyota Motor Corp. and Honda Motor Co. GM’s competitors, including GM, have tapped the permanent loan market to transition to electric cars. Ford raised $2.5 billion in green bonds in November, the largest such offering from a US corporation at the time. In March, Honda took the top spot, selling $2.75 billion worth of green bonds.

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The Detroit-based company this year published a perpetual finance framework that will guide GM, GM Financial and their subsidiaries in issuing permanent debt, including bonds and loans. This will enable GM to align its funding with a full-electric vision, as outlined.

U.S. and European corporate debt investors rewarded the automotive sector with the largest price gain average ever to sell green bonds at the start of the year, another incentive for the industry to tap this market. The 10-year green tranche appears to be about 9 basis points wider than the company’s 3.1 percent notes maturing in 2032, according to Bloomberg Intelligence credit analyst Joel Levington.

“It’s a matter of market conditions, more than ‘greenium’,” Levington said in an emailed response to questions on Thursday. “I’m sure there’s still a lot of demand for green bonds.”

Barclays Plc, BNP Paribas SA, Bank of America Corp, Citigroup Inc, Credit Agricole SA, Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley managed the bond sales, the person said.