BW Group product tanker owner Hafnia has clinched its first sustainability-linked loan (SLL) with a syndicate of 10 banks.

The $374m facility matures over seven years and refinances $676m and $128m loans maturing in March 2022 and December 2023.

Lenders include ABN Amro, BNP Paribas, DBS Bank and ING. Also on board are IYO Bank, OCBC and SEB.

Hafnia chief financial officer Perry van Echtelt said: "We greatly appreciate the strong support from our banks and are proud to collaborate with them on shipping’s decarbonisation."

The deal demonstrates the shipowner's access to "highly competitive" funding and its enduring commitment to decarbonising shipping, the CFO added.

The loan comes with an interest adjustment mechanism based on environmental performance, in line with the Poseidon Principles on green lending.

Hafnia is using Sustainalytics, a global environmental, social and governance (ESG) data and research company, to monitor the financing.

"This is Hafnia’s first syndicated sustainability-linked facility and one of the largest of its kind in the shipping sector," the company said.

ING and OCBC Bank acted as joint sustainability coordinators for the SLL.

Elaine Lam, head of global corporate banking at OCBC, said shipping is vital to economic growth.

She added that it was "heartening" to see Hafnia commit to decarbonising their fleet by harnessing new technologies and improving efficiency.

Milestone transaction

"We believe this milestone transaction will inspire more peers to create a sustainable and low-carbon shipping industry. Sustainable finance, such as this SLL, is critical to accelerate the industry’s transition," Lam said.

Stephen Fewster, global head of shipping at ING, said: "When an industry leader like Hafnia takes out an SSL, the entire sector takes notice.

"We are especially encouraged to see Hafnia align its KPIs with the Poseidon Principles. As a Poseidon Principles signatory, ING hopes that Hafnia’s bold commitment will inspire the lenders and other financial institutions to join the Poseidon Principles and advance international shipping’s decarbonisation."

Hafnia said earlier in March that it was upgrading its fleet and optimising efficiency to increase performance and reduce its environmental footprint.

The company said this was being done in a number of ways, including installing propeller boss cap fins, using twisted leading edge rubber bulbs and increasing propeller diameters.

Earlier this month, Hafnia announced a net loss of $26.4m for the fourth quarter, down from profit of $42.4m in 2019.

Time charter equivalent (TCE) earnings fell to $104.3m, versus $157.1m the year before. The average TCE figure was $12,389 per day.

As of 11 February, the owner had 62% of total earnings days fixed in the first quarter at $12,450 per day. Break-even is $14,445 per day.