Banking

OCBC provides S$71m Sora-based green loan to Tong Eng Group

Wed, Nov 18, 2020 – 12:31 PM

OCBC has provided a S$71 million revolving green loan referencing the Singapore Overnight Rate Average (Sora) to Singapore property developer Tong Eng Group.

This is Singapore’s first green loan referencing the Sora, OCBC and Tong Eng said in a joint press statement on Wednesday. Proceeds will be used to refinance Tong Eng Building, which received the Building and Construction Authority (BCA) Green Mark Platinum re-certification last month, they said.

The loan’s interest rate will be calculated based on the three-month compounded Sora published by the Monetary Authority of Singapore, as well as an applicable margin.

Tong Eng will be informed on the first day of the loan, and thereafter, on each rollover of the loan, of the amount of interest due on its outstanding loan at the end of an interest period.

OCBC and Tong Eng said this “compounding in-advance” methodology provides better visibility and therefore facilitates cashflow planning with regard to interest payment.

The green Sora-based loan was raised under the property developer’s newly-established green loan framework developed together with OCBC as green loan adviser.

To obtain the BCA Green Mark Platinum Award, Tong Eng incorporated several green features for Tong Eng Building which resulted in energy savings. Separately, the property developer undertook an extensive lift-upgrading exercise where all the lifts were fitted out with new technology motors, drives and controllers for optimum operation.

Tong Eng managing director Teo Tong Lim said: “Besides furthering our sustainability strategy, this loan is also an important step for us in transitioning our loan book to backward-looking rates – an inevitable shift that many businesses will have to undertake.”

He added that beginning this process early has given Tong Eng a better understanding of the pricing of such loans and the operational changes that have to be made, to prepare for the period after the cessation of the Swap Offer Rate.

OCBC head of global commercial banking Linus Goh said choosing to launch this loan with the refinancing for Tong Eng Building is an important signal of intent and a timely reminder that mature buildings can and should strive towards meeting today’s sustainability standards. The building has been a fixture in the central business district since the 1980s.

Tong Eng’s green loan is OCBC’s third Sora-based corporate loan. The first was extended to CapitaLand in June this year, and then to Sembcorp Industries in October. The lender introduced the first Sora-based retail home loan in July.

To date, OCBC has extended more than S$1.3 billion in corporate and retail loans referencing Sora, including close to S$1 billion in Sora-based home loans.


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