There was a time when it was cool to take care of the water. Now it also produces money, at least in Grupo Bimbo.
The company has just received a $ 1.75 billion loan to refinance various loans … but now cheaper. The trick? Link the low rates on those loans to your water and energy use. That is unprecedented.
Here I come warning of how the care of society and the environment has been getting into the guts of the financial sector of the world. It is not just human goodness that causes it, there is a lot of incentive in fear.
You saw what happened in Tula, in New Jersey or in Germany with the excess of water, but you also observe what happens with the price of the tortilla or the pork, just the opposite. Droughts increase prices.
People messed with the weather and the weather responded. Severe cold where there was none before can disable Texas gas pipelines and disrupt the entire energy system in a matter of days putting billions of dollars in loans for those pipes at risk.
A torrent can destroy an avenue and destroy the value of newly financed shopping centers; the same is the case with hotels that borrowed to be built near the Caribbean Sea, exposed to hurricanes.
Those are not my warnings, but from the Bank for International Settlements led by Agustín Carstens. They call them “green swans.”
Hence, companies that can prolong their life by contributing positively to the defense of the current system, receive increasing rewards from the financial sector, which reduces their uncertainty by putting their money in them.
What kind of rewards? Let’s go with the technical. The $ 1.75 billion in question will be charged over the next five years at rates ranging from 95 basis points on Libor to 72.5 basis points on TIIE.
In other words, the lowest rates are close to 1 percent in foreign currency and cap at less than 6 percent in pesos. They could move further down if their indicators improve … but also go up if they fail.
But the agreement does not look bad for a company that at the end of 2020 reported that its debt until that year had an average cost of 6.1 percent, which indicates that in December there was still a lot of money above that level, same as now it could lower your cost with this new capital inflow.
What did Bimbo do to deserve the deference? In water, two projects can serve as an example.
Sustainable Wheat, in Sonora and Sinaloa, included 81 producers trained to promote the application of sustainable innovations. That case resulted in savings of 4.49 million cubic meters. Equivalent to roughly the same number of water tanks, wow.
Then, the Sustainable Corn in Hidalgo and Jalisco involved 167 producers who helped reduce the consumption of even a larger volume of the liquid.
“For more than 10 years, our standards include the best measures of efficiency in the use of resources (…) Regarding the use of water, we have practices to optimize its use both in services and cleaning processes, including its treatment and guaranteeing the quality of reuse in general areas; and, lastly, practices related to reduction and recycling to achieve zero waste to the sanitary landfill ”.
The company boasts of having saved more than 3,000 complete “Olympic pools” in that period; that’s almost a pool full of water every day.
That comes in handy in a context in which names like S&P and Fitch published “scores” on sustainability (ESG) as of this year.
Companies have two ways of increasing their capital: increasing sales and reducing costs.
According to Morgan Stanley, Bimbo is doing both, so it could earn the equivalent of more than $ 2 billion in value. The New York bank estimates that its shares will be worth 66 pesos, about 10 pesos more than its current price. “Bimbo is our favorite name in Mexico,” Morgan Stanley stated in a report published on September 14.
Did Bimbo learn to get ‘juice’ out of water? Apparently yes.