Global Switch (“Global Switch or the Company”), the leading owner, operator and developer of large-scale network dense, carrier and cloud neutral multi-tenanted data centres in Europe and Asia-Pacific, has announced its inaugural €700 million green bond issuance. The issue further strengthens Global Switch’s capital position, further reducing the cost of funding, which in turn will reduce the overall cost of capital and enhance the return on investment for new developments and redevelopments.
The new bond matures on 7 October 2030 and pays a coupon of 1.375%. This extends Global Switch’s average bond debt maturity to 6.2 years from 4.2 years and reduces its average cost of bond debt to 2.2% from 2.6%. The transaction was well supported by strong long-term institutional investor interest, while the coupon is the lowest ever issued by the Company across any maturity. The issue was compliant with the ECB’s corporate sector purchase programme (CSPP) and achieved green bond certification.
Global Switch is currently rated at BBB, Baa2 and BBB by the three major ratings agencies (Fitch, Moody's and S&P Global Ratings, respectively) and remains one of the highest credit-rated data centre companies in the world.
Global Switch’s continued access to long-term and low cost of financing, together with its shareholder equity funding, supports the Company’s clearly defined organic development strategy and continued expansion. The last stage of Global Switch’s 70,000 sq m Hong Kong data centre is scheduled for completion in Q4 2020, while stage 1 of its Amsterdam East data centre is also nearing completion. Meanwhile, power densification projects are well underway at Global Switch’s London North and Paris East data centres, the latter where high power density and low Power Usage Effectiveness (PUE) space has recently been contracted by a leading international hyperscale customer for delivery in 2021.
The green bond issue forms part of Global Switch’s strategy to be climate neutral across its portfolio by 2030 through helping to fund emissions reduction and the development of more energy efficient data centres. These new facilities will meet the highest environmental standards and have, or will exceed, Leadership in Energy and Environmental Design (LEED) ‘Gold’ or Building Research Establishment Environmental Assessment Method (BREEAM) ‘Very Good’, as well as other local ‘green’ certifications.
According to the International Energy Agency (IEA), in 2018 data centres worldwide consumed around 200 TeraWatt hours (TWh) – equivalent to two-thirds of the entire United Kingdom’s electricity annual consumption or about 1% of global electricity use. Global Switch is leading by example in addressing energy efficiency with industry-leading targets for new developments with an annualised PUE of less than 1.2 in Europe or 1.4 in Asia-Pacific versus a global average of more than 1.5. This reflects Global Switch’s ambition to reduce carbon emissions and play its part in meeting the UN’s Sustainable Development Goal 7.3 of doubling the global rate of improvement in energy efficiency by 2030.
John Corcoran, Chief Executive Officer of Global Switch said:
“The launch of our inaugural green bond is a further building block in our long-term sustainability strategy. We intend to use the proceeds to accelerate our organic expansion strategy, to improve our carbon footprint and to support the needs of our customers through the design, development and innovation of new green data centres which deliver the highest standards of energy efficiency.”
Over 50% of Global Switch’s global footprint already benefits from renewable energy power generation and a number of our data centres have received at least one or more green building certifications. A particular highlight is the first stage of our Hong Kong data centre, which received a LEED Platinum certification in 2018 and obtained 100% scores in Innovation in Design and Regional Priority as well as exceptionally high scores in the important Sustainable Sites and Energy and Atmosphere areas demonstrating best in class design. Singapore Woodlands received LEED Gold and Frankfurt North is shortly to receive a BREEAM Very Good certification.
To help Global Switch deliver its sustainability objectives and support future green bond issues, the company has developed a Green Bond Framework. This framework is in line with the ICMA Green Bond Principles (GBP) 2018 and has been reviewed by Sustainalytics, the leading independent global provider of ESG and corporate governance research and ratings to investors. The framework outlines clear requirements for each green bond issue, covering Use of Proceeds, Process for Project Evaluation and Selection, Management of Proceeds and Reporting. Global Switch has also introduced a Green Bond Committee which will determine the projects to which funds are allocated, chaired by Global Switch's Chief Financial Officer, David Doyle.
David Doyle, Chief Financial Officer of Global Switch, said:
“Global Switch is committed to maintaining a strong investment grade credit profile. We are delighted to have set a new record-low coupon for the Company with today’s above benchmark long-dated ten-year bond issuance which recognises the quality of our business and the strength of our balance sheet. The transaction, reduces our overall cost of capital, extends our average debt maturity and will further enhance our return on investment for the development of new green data centres.”
Global Switch’s sustainability strategy focuses on:
Barclays and Deutsche Bank advised Global Switch on the transaction, King & Spalding acted as legal counsel to the Company, and Allen & Overy acted as legal counsel to the banks.
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About Global Switch
Global Switch is the leading owner, operator and developer of large-scale, carrier and cloud neutral, multi-customer data centres in Europe and Asia-Pacific. Founded in 1998, Global Switch has a proven business model, demonstrable track record and is one of the highest credit rated data centre companies in the world with investment grade credit ratings from Fitch, Moody’s and S&P Global Ratings.
Global Switch is a vital strategic partner for customers that require secure and resilient data centre services with scalable capacity and a high-level customer service. The Company's focus is on highly resilient, central, low latency, network dense locations in prime city centre locations and internet hubs close to its customers on the edge of financial and business districts. Global Switch’s data centres operate exclusively in the Tier I markets of Europe and Asia-Pacific to Tier III or higher and currently total around 390,000 sq m (4,200,000 sq ft) of floor space and are occupied by a broad range of customers, global and national, large and small including government organisations, financial institutions, enterprises, global systems integrators, telecommunication carriers, cloud and managed service providers and other hosting businesses. For more information visit: www.globalswitch.com.