Sembcorp Marine secures first sustainability-linked loan facility with DBS bank
First SORA-based sustainability-linked loan for the maritime industry
Solar panels (left) at Sembcorp Marine Tuas Boulevard Yard powers the Group's steel fabrication facility with clean energy.
On the right is the Yard’s goliath cranes with 30,000 tonne lifting capacity and 100m hook height that enable mega-block installation,
helping customers fulfil business objectives of safety, quality, time and cost.
This SGD 500 million facility is believed to be the first SORA-based sustainability-linked loan for the maritime industry. The loan’s interest rate comprises two components: (1) a compounded daily SORA rate calculated in arrears, and (2) an applicable margin. The loan features interest rate discounts linked to pre-determined Environmental, Social and Governance (“ESG”) targets. As these ESG targets are achieved, Sembcorp Marine will enjoy savings in borrowing costs.
Commenting on the sustainability-linked facility, Sembcorp Marine's Group Finance Director, Mr William Goh, said: “The inclusion of green financing dovetails with our strategic transformation and pivot since 2015 to provide innovative engineering solutions to the global offshore & marine and energy industries, with a keen focus on cleaner, greener and renewable energy solutions. This sustainability-linked financing complements our ongoing efforts to proactively manage the environmental impact of our business.”
DBS’ Head of Oil and Gas, Mr Dorian Delteil, said, “As a purpose-driven bank, we believe financial institutions have a strategic and pivotal role to play in proactively supporting industries work towards a lower-carbon future. We remain dedicated and committed in helping our clients navigate and structure their sustainability roadmaps – as the journey is different from corporate to corporate, and from industry to industry. Every transitional step will contribute to making an important difference, and we strive to continue engaging with like-minded clients, such as Sembcorp Marine, in making the shift towards more sustainable operations and working towards achieving a net zero emissions economy.”
In 2019, some SGD 530 million of Sembcorp Marine’s projects were related to green solutions including scrubber and ballast water management system retrofits, and gas and renewable energy projects.
Sembcorp Marine has also introduced more green features in its operations. In 2019, Sembcorp Marine partially replaced its grid-supplied electricity with clean energy harnessed from the solar-roof installed at its steel fabrication facility at its Tuas Boulevard Yard. This solar source generated more than 5,000 MWh of electricity (or clean energy to power about 1,100 four-room flats annually), enabling Sembcorp Marine to avoid emissions of approximately 2,100 tonnes of carbon (tCO2e).
To increase its support for businesses seeking to achieve their sustainability ambitions, DBS has committed to finance SGD 50 billion in renewable, clean-energy and green projects by 2024, more than doubling its earlier target of SGD 20 billion. DBS is also the first Singapore bank to offer Transition Financing and launched the world’s first sustainable and transition finance framework and taxonomy to help clients advance on sustainability agenda.
With the impending discontinuation of interest rate benchmarks such as the London Inter-bank Offered Rate (LIBOR) and Swap Offer Rate (SOR), DBS has been partnering its clients to achieve a smooth and seamless transition to alternative Risk Free Benchmark Rates (RFRs). DBS has closed more than SGD 1 billion in loans referencing the RFRs in 2020 and along the way, broke new grounds such as the first SORA club loan coupled with a cross currency swap and Singapore’s first business property mortgage loan referencing SORA.
Mr William Goh added: “We are glad to play our part in supporting the transition of the industry benchmark from SOR to SORA. Receiving interest cost savings through meeting our ESG targets is a practical and tangible way by the financial community to acknowledge the efforts and milestones of our sustainability journey.”
The ESG targets in this facility are aligned with Sembcorp Marine's performance targets set out in the Group’s Sustainability Report. For more information on Sembcorp Marine’s sustainability practices, please download the Group’s Sustainability Report 2019 by clicking here.
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's "AA-" and "Aa1" credit ratings are among the highest in the world.
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