ING backs first of its kind sustainable securitisation transaction for Bayfront Infrastructure Management
ING acted as joint global coordinator and sole sustainability structuring advisor for Singapore government sponsored Bayfront Infrastructure Management on its second infrastructure asset-backed securitised (IABS) issuance, Bayfront Infrastructure Capital II. This was successfully priced at $401 million and leverages Bayfront's sustainable finance framework, which ING played a key role in developing.
A significant milestone in the securitisation of project and infrastructure debt in Asia, this is the first time a sustainability tranche is included in such an issuance.
“This is a feature we think will be more commonly seen going forward given the increasing demand for sustainable investment opportunities globally and a focus on generation of sustainable infrastructure assets in emerging markets," said Jordan Batchelor, ING’s head of Global Balance Sheet Distribution APAC.
Launched in 2019, Bayfront is a strategic partnership between the Singapore government and the Asian Infrastructure Investment Bank that aims to address the infrastructure financing gap in the Asia-Pacific region on the back of growing demand in recent years. The focus on sustainability gives institutional investors such as insurance companies, pension funds and specialised asset managers an opportunity to contribute to the achievement of UN Sustainable Development Goals in the region.
The transaction offers investors exposure to a portfolio of 27 project and infrastructure loans, diversified across 13 countries and eight industry sub-sectors. Approximately $184.8 million, or 46%, of the portfolio is considered eligible sustainable (green or social) assets in accordance with Bayfront's sustainable finance framework. Additionally, ING supported Bayfront in receiving a positive second party opinion from international verification body DNV, as well as a dedicated pre-issuance report showcasing the alignment of the included eligible assets with its sustainable finance framework.
More importantly, the unique sustainability tranche has proven that sustainability and material gains to the bottom line can go hand-in-hand.
Helge Muenkel, head of Asia Pacific Sustainable Finance & Global Capital Markets explained: “This transaction shows there can be quantifiable benefits for businesses, despite the additional work and costs involved in making a bond issuance sustainable. The final pricing resulted in a differential of 5bps tighter for the sustainable tranche, which is highly instructive for the CFOs and heads of Treasury that we speak to and signals that the commitment to a greener future can pay off in the longer run. More importantly, it links new institutional investors to sustainable infrastructure assets and brings capital to sustainable projects that contribute to a better future.”