Wells Fargo Issues Inclusive Communities and Climate Bond

Rhea-AI Summary

Wells Fargo has launched its inaugural Inclusive Communities and Climate Bond, marking its first Sustainability Bond. This bond will finance initiatives focused on housing affordability, socioeconomic opportunity, and renewable energy. Led by Wells Fargo Securities, this transaction emphasizes investments in low-to-moderate income areas and diverse broker dealers. The bond, priced on May 12, 2021, offers a fixed interest rate of 0.805% until May 19, 2024, after which it transitions to a variable rate until maturity in 2025. Wells Fargo's commitment to sustainable finance aims to foster an inclusive economic recovery.

Positive

• Launch of the first Sustainability Bond to support housing affordability and renewable energy.
• 75% of underwriting fees directed to diverse broker dealers, promoting social equity.
• The bond aligns with recognized sustainability guidelines, enhancing credibility.

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• None.

Wells Fargo today announced the issuance of an Inclusive Communities and Climate Bond, its first Sustainability Bond, which will fund projects and programs that support housing affordability, socioeconomic opportunity, and renewable energy. The transaction builds on Wells Fargo’s expertise in and history of underwriting green, social, and sustainability bonds, and advances the company’s commitment to accelerate a more inclusive and sustainable economy.

(Photo: Wells Fargo)

Wells Fargo Securities, LLC served as bookrunner for the issuance, joined by five broker dealers whose owners include people of color, women, and service-disabled veterans – Academy Securities, Inc., CastleOak Securities, L.P., Penserra Securities LLC, Samuel A. Ramirez & Company, Inc., and Siebert Williams Shank & Co., LLC. They, along with 16 additional diverse broker dealers whose owners are from underrepresented groups (see list below), will receive 75% of the underwriting fees from the transaction. BurgherGray LLP, a minority-owned law firm, was retained as issuer’s co-counsel for the offering, together with Faegre Drinker Biddle & Reath LLP. Gibson, Dunn & Crutcher LLP served as underwriters’ counsel.

“Wells Fargo’s first Sustainability Bond is intentionally designed to support job creation and human and health services in minority communities, housing affordability for low-to-moderate income individuals and families, and the development of renewable energy resources,” said Bill Daley, vice chairman of Public Affairs at Wells Fargo. “The focus on capital investment in moderate- and low-income, predominantly minority areas, and our partnership with diverse firms in the offering of this Sustainability Bond underscores Wells Fargo’s commitment to supporting historically marginalized communities, which have been some of the hardest hit by COVID-19 and the impacts of climate change.”

“We are honored to play such a significant role in Wells Fargo's inaugural Sustainability Bond,” said Chris Williams, Chairman of Siebert Williams Shank & Co., LLC. “Wells Fargo's decision to mandate diverse firms as joint bookrunners with full participation in the investor book building and allocation process is a first among U.S. money center banks and underscores Wells Fargo’s commitment to social inclusion for all dimensions of this financing.”

The transaction priced on May 12, 2021. Unless redeemed, the notes will pay interest semi-annually at a fixed rate of 0.805% until May 19, 2024 and then pay quarterly interest based on Compounded SOFR + 0.51% until the stated maturity date of May 19, 2025.

Wells Fargo’s Sustainability Bond Framework (“Framework”) is available on the company website. Sustainalytics has reviewed the Framework and issued a Second Party Opinion, which found it to be “credible and impactful,” and aligned with the Sustainability Bond Guidelines 2018, Green Bond Principles 2018, and Social Bond Principles 2020. Through the Inclusive Communities and Climate Bond, Wells Fargo aims to deliver impact in the following ways:

Housing affordability: Increased quantity, quality, and overall affordability of multifamily housing properties for low- to moderate-income (“LMI”) populations.

Socioeconomic advancement and empowerment: Improved employment opportunities, education and healthcare outcomes, and community development in LMI majority minority census-tract areas through investment in for-profit and nonprofit enterprises located in or otherwise serving these communities.

Renewable energy: Increased global renewable energy generation capacity, resulting from investments in large-scale on- and off-shore wind, solar and geothermal projects, and related equipment manufacturing.

“This transaction represents an important next step in delivering on Wells Fargo’s commitment to expand our sustainable finance capabilities in support of an inclusive economic recovery and an equitable transition to a low-carbon future,” said Wells Fargo Corporate Treasurer Neal Blinde. “Wells Fargo is pleased to be able to contribute to the strong momentum we’re seeing in the sustainability bond market, and help meet the growing demand for investment opportunities that deliver positive social and environmental outcomes.”

Wells Fargo Securities, LLC led the first non-financial corporate green bond offered in the U.S. Investment Grade market in 2014 and has since underwritten over $45 billion in principal amount of corporate green, social, sustainability, and sustainability-linked bonds. In 2020, it was also the top underwriter of ESG municipal debt issuances with over 21% of market share.¹ An example of Wells Fargo Securities’ underwriting activity includes a unique $1 billion social bond transaction on behalf of the Ford Foundation to allow the organization to substantially increase the amount of money it distributes.

In March 2021, Wells Fargo announced its goal to reach net-zero greenhouse gas emissions by 2050, including financed emissions, and to deploy an additional $500 billion in financing to sustainable businesses and projects between 2021 and 2030. The company deployed approximately $157 billion in sustainable finance between 2012 and 2020.²

In 2020, Wells Fargo elevated its commitment to diversity, equity, and inclusion. Over the past several months, the company has implemented a number of strategies to accelerate our ongoing progress toward change in our workplace, and to deliver an inclusive and sustainable recovery from the impacts of COVID-19. For more information, go to: https://stories.wf.com/category/diversity-inclusion/.

Additional diverse broker dealers on the transaction: Drexel Hamilton, LLC, Great Pacific Securities, Loop Capital Markets LLC, Stern Brothers & Co., American Veterans Group, PBC, AmeriVet Securities, Inc., Apto Partners, LLC, Bancroft Capital, LLC, Blaylock Van, LLC, Cabrera Capital Markets LLC, C.L. King & Associates, Inc., MFR Securities, Inc., Multi-Bank Securities, Inc., R. Seelaus & Co., LLC, Roberts & Ryan Investments, Inc., and Telsey Advisory Group LLC.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a leading financial services company that has approximately $1.9 trillion in assets and proudly serves one in three U.S. households and more than 10% of all middle market companies and small businesses in the U.S. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management. Wells Fargo ranked No. 30 on Fortune’s 2020 rankings of America’s largest corporations. In the communities we serve, the company focuses its social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health and a low-carbon economy. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.

Additional information may be found at www.wellsfargo.com | Twitter: @WellsFargo.

Cautionary statement about forward-looking statements

This news release contains forward-looking statements about our future financial performance and business. Because forward-looking statements are based on our current expectations and assumptions regarding the future, they are subject to inherent risks and uncertainties. Do not unduly rely on forward-looking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. For information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the “Forward-Looking Statements” discussion in Wells Fargo’s most recent Quarterly Report on Form 10-Q as well as to Wells Fargo’s other reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended Dec. 31, 2020, available on its website at www.sec.gov.

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¹ The ranking reflects senior managed, negotiated, issuer-labeled green, social, and sustainable new issue municipal securities with true credit splits as calculated by Bloomberg

² In 2018, Wells Fargo announced its $200 billion sustainable finance commitment and updated the methodology for how it tracks progress. The 2018-2020 results are not comparable to previously reported results for the “finance environmentally beneficial business opportunity” progress statement. The methodology used to account for sustainable finance 2018-2020 is available online. Methodology for accounting $500 billion commitment by 2030 is currently in development and will be made publicly available when finalized.

News Release Category: WF-PESG

View source version on businesswire.com: https://www.businesswire.com/news/home/20210519005681/en/

FAQ

What is the purpose of Wells Fargo's Inclusive Communities and Climate Bond?

The bond aims to fund projects supporting housing affordability, socioeconomic opportunity, and renewable energy.

When was Wells Fargo's Sustainability Bond priced?

The bond was priced on May 12, 2021.

What is the fixed interest rate for the Wells Fargo Sustainability Bond?

The bond pays a fixed interest rate of 0.805% until May 19, 2024.

What commitment does Wells Fargo make regarding diversity in this bond issuance?

Wells Fargo has mandated diverse firms as joint bookrunners, ensuring social inclusion.

How does Wells Fargo's Sustainability Bond align with sustainability standards?

The bond has been reviewed by Sustainalytics and aligns with Sustainability Bond Guidelines and Green Bond Principles.