Bank of China contributes $150 million to $1.62 billion syndicated loan to PLN for 35,000MW electricity program (Linked to Project ID#92462)

On October 25, 2018, financial close was reached on a deal in which a syndicate of 19 lenders — including Bank of China (Hong Kong) Limited (BOCHK), ICBC Indonesia, and Industrial and Commercial Bank of China (Asia) Limited — entered into a $1.62 billion USD syndicated loan agreement with PT Perusahaan Listrik Negara (Persero) (PLN) — an Indonesian state-owned corporation with a monopoly on electric power distribution in Indonesia — for general corporate purposes. The syndicated loan agreement consisted of term loan facilities worth $1.32 billion with a five-year tenor as Tranche A and a revolving credit facility worth $300 million with a three-year tenor as Tranche B. Tranche A carries a margin of LIBOR plus 92.32 basis points (offshore) or 102.32 basis points (onshore) and has an average tenor of 4.18 years, while Tranche B carries a margin of LIBOR plus 75 basis point (offshore) or 85 basis points (onshore) and has an average tenor of 2.83 years. The transaction offered a top-level, all-in pricing of LIBOR plus 107.87 basis points (offshore) or 117.87 basis points (onshore) for lenders participating in Tranche A only, and a blended top-level all-in pricing of 105.8 basis points (offshore) or 115.8 basis points (onshore) for participation in both tranches. BOCHK, Australia and New Zealand Banking Group (ANZ), Oversea-Chinese Banking Corporation Ltd (OCBC Bank), Citigroup Global Markets Singapore Ltd, Sumitomo Mitsui Banking Corporation (SMBC) Singapore Branch / PT Bank Sumitomo Mitsui Indonesia, and United Overseas Bank Limited served as the senior mandated lead arrangers and bookrunners. ICBC Indonesia, ICBC Asia, and 13 other lenders — Bank of Taiwan, Cathay United Bank, DZ Bank, E.Sun Commercial Bank, First Abu Dhabi Bank, Hokkoku Bank, Hyakugo Bank, Hua Nan Commercial Bank, Land Bank of Taiwan, Mega International Bank, State Bank of India, and Shanghai Commercial and Saving Bank — joined in syndication. The loan was launched into general syndication in July 2018 at an initial size of $1.5 billion USD with a $500 million USD greenshoe option, that was boosted to $1.62 billion USD after 13 lenders joined during syndication. BOCHK contributed $150 million USD to the loan syndicate, as captured via Project ID#61050. ICBC Indonesia and ICBC Asia also jointly contributed $150 million ISD, as captured via Project ID#92462. The borrower was expected to use the proceeds of the loan for general corporate purposes. Specifically, to finance the construction of power plants as a part of the implementation of the Government of Indonesia’s 35,000-megawatt (MW) generation program. The power program supported by this syndicated loan was launched by President Joko Widodo’s administration in 2014. The program was announced in 2014 by President Jokowi. He planned to add 35,000 MW of new generating capacity to Indonesia’s electric grid — by developing power plants (both conventional and renewable) — no later than the end of his first term in 2019. As of December 31, 2019, 19% ( 6,811MW) of the 35,000 MW program has been realized. President Director of PT PLN (Persero) Zulkifli Zaini reported that power plants under construction have a total capacity of 20,167.8 MW, equivalent to 57%. 6,877.6 MW (20%) are in the process of power purchase agreement (PPA) negotiation. 2% are in the procurement phase (829 MW) and 2% are in the planning phase (734 MW). In April 2019, PLN secured Rp 16.75 trillion ($1.18 billion) in syndicated loans from seven local financial institutions for the flagship 35,000MW electricity program.

Additional details

1. It is not clear in which tranche(s) ICBC Asia and ICBC Indonesia participated; therefore, AidData has assumed for the time being that the interest rate corresponds to the blended top-level all-in pricing of LIBOR plus 105.8 basis points (offshore). AidData uses average 6-month LIBOR rate from the syndicated loan agreement date on October 25, 2018 (2.687%) and adds the margin (105.8 basis points) to estimate the all-in interest rate (3.745%). 2. For the time being, AidData assumes a maturity length of 4 years. 3. On June 8, 2018, PLN appointed several banks as Mandated Lead Arranger and Bookrunners (MLABs), including Bank of China, Oversea-Chinese Banking Corporation Ltd, Australia and New Zealand Banking Group Ltd (ANZ Banking Group), Citigroup Global Markets Singapore Ltd, Sumitomo Mitsui Banking Corporation (SMBC) Singapore Branch / PT Bank Sumitomo Mitsui Indonesia, Mizuho Bank, and United Overseas Bank Limited.

Number of official sources

6

Number of total sources

21