BMO Enters Financing Agreement with Seaspan

BMO Financial Group (TSE: BMO) (NYSE: BMO) announced Thursday a financing agreement with Seaspan, a leading containership leasing company.

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Decarbonization Objectives

The agreement, which amends an existing credit facility, introduces a margin adjustment mechanism linked to aligning the carbon intensity of Seaspan’s vessels with the International Maritime Organization’s 2050 decarbonization trajectory.

The $250-million three-year revolving sustainability-linked credit facility includes terms that reduce or increase borrowing costs whether or not vessel carbon intensity targets are met, and whether sustainability-related contracts with shippers are being honored or not.

This is the 14th sustainability loan structured by BMO in the last 12 months. The Canadian bank has committed to being the primary partner of its customers in its transition to a carbon-neutral world.

Management Commentary

“As sustainable lending continues to grow around the world, BMO is proud to be the leading Canadian bank for SLL structuring. Helping clients like Seaspan reach their ESG goals is an important way BMO is Boldly Growing the Good in business and life, and a great example of the progress our clients across industries can make as we work together to build a more sustainable future,” said Jonathan Hackett, Head, Sustainable Finance, BMO Capital Markets.

Wall Street’s Take

On February 15, TD Securities analyst Mario Mendonca kept a Buy rating on BMO and set a price target of C$170. This implies 14.6% upside potential.

The rest of the Street is cautiously optimistic on BMO with a Moderate Buy consensus rating based on six Buys and four Holds. The average Bank of Montreal price target of C$158.88 implies 7.1% upside potential from current levels.

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