Sembcorp Marine secures first sustainability-linked loan facility with DBS Bank
Sembcorp Marine Ltd has secured a Sustainability-linked financing facility which references the Singapore Overnight Rate Average (“SORA”) from DBS Bank, through its wholly owned subsidiary, Sembcorp Marine Financial Services Pte. Ltd, according to the company's release.
This S$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: a compounded daily SORA rate calculated in arrears, and 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.
In 2019, some S$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 S$50 billion in renewable, clean-energy and green projects by 2024, more than doubling its earlier target of S$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 Singapore Overnight Rate Average (SORA) club loan coupled with a cross currency swap and Singapore’s first business property mortgage loan referencing SORA.
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.
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.
About Sembcorp Marine
Sembcorp Marine provides innovative engineering solutions to the global offshore, marine and energy industries. Headquartered in Singapore, the Group has close to 60 years of track record in the design and construction of rigs, floaters, offshore platforms and specialised vessels, as well as in the repair, upgrading and conversion of different ship types. Sembcorp Marine’s solutions focus on the following areas: Renewables, Process, Gas, Ocean Living and Advanced Drilling Rigs.
Sembcorp Marine’s customers include major energy companies, owners of floating production units, shipping companies and cruise and ferry operators. They are supported by four commercial units: Rigs & Floaters; Repairs & Upgrades; Offshore Platforms; and Specialised Shipbuilding.
Sembcorp Marine operates shipyards and other facilities in Singapore, Indonesia, the United Kingdom, Norway and Brazil.