Saturday, 18 January 2020

Asia-Pacific Awards

  • Print
  • Share
  • Save

Bank of the Year – MUFG - It has been a busy year for Japanese bank MUFG and nowhere more so than in the Asia-Pacific region, where the institution is PFI’s Asia-Pacific Bank of the Year.

Bank of the Year – MUFG

It has been a busy year for Japanese bank MUFG and nowhere more so than in the Asia-Pacific region, where the institution is PFI’s Asia-Pacific Bank of the Year.

With a team of 194 professionals across various sectors of project finance, located in Tokyo (80), Sydney & Melbourne (46), Singapore (52) and Hong Kong (16), the bank is consistently a leading arranger for regional project financings.

MUFG believes its success comes from implementing a “one platform” approach to serving its clients. This approach blends the bank’s sector specialists, ranging from renewable energy and rail to aviation and housing, with its capital markets experts.

Overlaying this is a product-agnostic advisory service, creating a “one-stop shop” for clients, and an enhanced approach to financial sponsors, recognising the growing importance of this client segment in project finance. This structure allows MUFG to deploy financial solutions that best suit its clients’ needs.

One of its biggest deals was the dual-tranche US$1.85bn debt facility raised to finance the Jambaran-Tiung Biru (JTB) unitisation onshore gas project, which was earmarked by the Indonesian government as a national strategic project. The JTB project is an upstream development and gas processing facility in Central Java, Indonesia. The sponsor was Pertamina EP Cepu (PEPC), a subsidiary of Pertamina.

MUFG led a multiple-role effort as financial adviser, MLA, facility agent, investment agent, private PRI coordinating bank, and hedge provider. The loan signed in June this year was provided by 11 MLAs that included seven international and four domestic banks. MUFG also was the sole Wakala investor for the Islamic finance tranches.

It led the financing for the Riau IPP in Indonesia and was MLA on the Van Phong Power deal in Vietnam.

In Australia, MUFG was financial adviser and MLAB on the A$720m regional rail fleet project in New South Wales. The bank played an instrumental and leading role in the transaction, bringing together a group of international banks to finance the complex delivery of three new fleets of rolling stock to replace intercity and regional trains.

As financial adviser, MUFG assisted the sponsors by leading structuring and negotiations, financial modelling, and coordinating due diligence to deliver a competitive and compelling bid.

MUFG provided the largest debt and interest rate swap commitment to support a unique financing structure that included a notional debt balloon at the end of the initial term of the concession.

To further support the client during delivery and operations phases, MUFG was also the facility agent, security trustee and account bank.

In New Zealand, MUFG advised Tilt Renewables on the development of the 133MW Waipipi Wind Farm on New Zealand’s North Island. The facility is the first major wind farm to be project financed in New Zealand.

MUFG Advisory acted as Tilt Renewables’ sole debt adviser, while MUFG Project Finance participated in the US$177m construction/term financing with three other lenders as MLA, bank guarantee provider and swap bank.

In its home country, MUFG was the MLA for the development finance of a 75MW biomass power plant located in Chiba Prefecture, Japan. The project sells 100% of its output to the offtaker, TEPCO Power Grid, under a 20-year FIT Contract. MUFG played key roles as mandated lead arranger and swap provider.

Power Deal of the Year – Gulf PD

Thailand launched the Eastern Economic Corridor (EEC) last year under its Thailand 4.0 programme, to drive economic development and push the country to the level of a developed nation. The EEC straddles three eastern provinces of Thailand – Chonburi, Rayong, and Chachoengsao – off the coast of the Gulf of Thailand.

Helping power the province of Rayong is a new 2,500MW combined-cycle gas turbine power plant being sponsored by Independent Power Development, a joint venture between Gulf Energy Development (GED, 70%) and Japan’s Mitsui & Co (30%).

The Gulf PD power plant, which will play a crucial part in EEC, is PFI’s Asia-Pacific power deal of the year.

The project cost is US$1.65bn and the company raised a dual-currency US$1.366bn loan facility with a long tenor of 23 years, just two years shorter than the 25-year PPA with EGAT. The deal was supported by 13 commercial banks and three export credit agencies. Previous IPP financings usually had a 50:50 split between Thai baht and US dollars, but in this case, the split is about 60% for the local currency and 40% for the US dollar.

Asian Development Bank (ADB) is providing US$180m, split into a US$50m direct loan, a US$85m B loan funded by DZ Bank and OCBC, and a US$45m loan through Leading Asia’s Private Infrastructure Fund (LEAP).

Japan Bank for International Cooperation (JBIC) is providing a US$208m direct loan, and the remaining amount of about US$978m is provided by Bank of Ayudhya, Bangkok Bank, Siam Commercial Bank, CIMB Thai Bank, Kasikornbank, Krung Thai Bank, Land and Houses Bank, Mizuho Bank, SMBC and Sumitomo Mitsui Trust Bank, as well as Export and Import Bank of Thailand (Thai Exim).

Legal advisers were Linklaters for the lenders and Baker & McKenzie for the sponsors. Both have also advised on Gulf SRC, the first 2,500MW Gulf IPP deal completed in November last year.

Gulf PD, located in Rojana Rayong 2 Industrial Park in the Pluak Daeng district of Rayong province, is the second Gulf IPP deal. It comes one year after the successful closing of a similar 2,500MW Gulf SRC gas-fired IPP project in 2018, which broke a four-year drought of major IPP funding in the country.

With this year’s loan signing of Gulf PD, the sponsors have now completed the fundraising for a massive 5,000MW capacity, with the first units targeted to commence operation in 2021 and the last unit in 2026.

MHPS, in consortium with the Sino-Thai Engineering and Construction (STECON) was awarded the turnkey engineering, procurement and construction (EPC) contract.

Both projects will be crucial to achieving Thailand 4.0.

Renewable Deal of the Year – Yunlin

The year 2019 saw Taiwan’s offshore wind energy sector dominating the activities of project financiers in the region. Leading that is the 640MW Yunlin offshore wind energy project, the largest offshore wind deal in Taiwan and in Asia with a total project cost of NT$94bn, or about US$3bn.

Its project company Yunneng Wind Power Co raised US$85.5bn of 18-year non-recourse debt featuring a complex deal structure that sets a market precedent for long-term funding in Taiwan dollars together with long-term interest rate hedging, making it PFI’s Asia-Pacific renewable deal of the year.

Yunneng’s sponsors are wpd of Germany, one of the seven developers awarded in the first batch of offshore wind allocations in 2018. It divested a 27% stake, keeping 73%, to a Sojitz-led Japanese consortium. Its other members are JXTG, Shikoku Electric, Chugoku Electric and Chudenko Corp.

The project offers many firsts. Besides being the largest wind transaction in the region, it is the first large offshore wind project in the country with a huge participation by financial institutions and multiple ECA participation.

It is the first offshore transaction for some of the banks and export credit agencies (ECAs), and for some their first participation in Asia.

There were 15 international and four domestic commercial banks, and the ECAs were Euler Hermes of Germany, Atradius of the Netherlands and EKF of Denmark.

The international mandated lead arrangers were BNP Paribas, Credit Agricole CIB, DBS, Deutsche Bank, ING, Mizuho, MUFG, Natixis, OCBC, SMBC, Societe Generale, and Standard Chartered, while the domestic banks were Cathay United Bank, CTBC Bank, E-Sun Commercial Bank and Fubon Bank.

Also joining as MLAs were Commerzbank and KfW IPEX-Bank, which provided letters of credit to facilitate the project. KfW IPEX also provided an 18-year comprehensive guarantee, giving the commercial lender a minimum AA+ covered exposure. In addition, Siemens Bank joined as an MLA, providing a €100m facility to reduce the euro/NT$ mismatch.

The project has adopted a multi-contracting package with separate contracts for the different aspects of the project including offshore and onshore installations. EPC contractors include SGRE, Formosa Heavy Industries, Steelwind, CTCI, Smulders, GE, Seaway, Sapura and Jumbo. COD is December 31 2021.

The sponsors had SMBC as international financial adviser and E.Sun Bank as the domestic financial adviser. Its legal advisers were Linklaters (international) and Lee and Li (Taiwan). The lenders’ legal counsel were White & Case (international), Tsar & Tsai (Taiwan), De Brauw Blackstone Westbroek (Netherlands), and Kromann Reumert (Denmark). Other advisers were Benatar & Co (insurance), PwC (financial model, tax & accounting), Wood Group (technical) and Mott MacDonald (environment & social).

Oil & Gas Deal of the Year – Jambaran-Tiung Biru

It’s been some time since Pertamina, Indonesia’s state-owned oil and gas company, has returned to the project finance market to raise funds. This time, it is its subsidiary Pertamina EP Cepu (PEPC) that is the anchor sponsor to one of the largest upstream oil and gas project in the country, the Jambaran-Tiung Biru (JTB) gas unitisation project, which is PFI’s Asia-Pacific oil and gas deal of the year.

The project marks a number of important milestones for project financing in the country and the region. It utilises a trustee borrowing structure (TBS), which is a first for a greenfield limited recourse upstream development in the country. It has no government support and no recourse to Pertamina.

At the same time, it is the first project financing in the region that combines conventional interest-bearing tranches with an Islamic financing tranche.

JTB, which was formed by the unitisation of two gas fields, is an important national strategic project and its offtake is 100% for domestic consumption. The JTB project is underpinned entirely by domestic sales and financed by both domestic as well as international financial institutions. Indeed, it features the increasingly role of local banks in major project financings in the republic.

The JTB project involves the development of proven gas reserves, as well as the construction and operation of a gas processing facility and pipelines. It is located in the unitised Jambaran-Tiung Biru field (JTB field) in Bojonegoro Regency, East Java Province, Indonesia. It is supported by gas sales of up to 192 mscfpd under a long-term, fixed-price and fixed-volume take-or-pay gas sales agreement with the offtaker, parent Pertamina. Project completion is scheduled to occur in 2021.

The debt amount is US$1.85bn, which was raised in two tranches – a 10-year tranche and a 15-year – applied to both the conventional and the Islamic tranches.

The lender group comprises both international and domestic financial institutions. The international banks are Bank of China, CIMB, DBS, Intesa Sanpaolo, Maybank, MUFG, and SMBC. The domestic banks are Bank Mandiri, Bank Negara Indonesia, Bank BTPN, and Bank Rakyat Indonesia. MUFG (Malaysia) participated as Wakala investor for the Islamic finance tranches.

MUFG was the financial adviser to the sponsor and its legal advisers were Latham & Watkins (international) and UMBRA Legal Solutions (domestic). The lenders and Wakala investors had Milbank (international) and Ali Budiardjo, Nugroho, Reksodiputro (ABNR, domestic). HSBC Bank USA, National Association was the trustee borrower represented by Latham & Watkins.

Petrochemical Deal of the Year – RAPID

Malaysia is moving into a new frontier of economic development and helping achieve that target is the development of the largest petrochemical and refinery project in Asia to-date. The landmark deal, called the Refinery & Petrochemical Integrated Development (RAPID) or the Marigold project, is PFI’s Asia-Pacific petrochemical deal of the year.

The project boasts of a strategic alliance between two of the world’s largest and most successful national oil companies: Petroliam Nasional (50%) and Saudi Aramco (50%).

It is part of Petronas’ 6,239 acre Pengerang Integrated Complex (PIC), which is strategically located in the southern Malaysian state of Johor. It will be the only integrated refinery, steam cracker and petrochemical complex in Malaysia with strategic access to major shipping routes, land availability and a natural deepwater harbour, so is expected to accelerate the growth of Malaysia’s oil and gas downstream sector.

RAPID will have the capacity to process 300,000 barrels of crude oil per day and produce Euro 5 gasoline and diesel, and other refined products, as well as feedstock for the production of 3.3mtpa of petrochemical products. Construction is almost complete. An accident at one of its plants earlier this year may have caused some financing delay but that did not frustrate or drive away its lenders. The Marigold project, once completed, will be the largest in Malaysia and the fourth largest in South-East Asia.

Its financing was not easy. It started with an 18-month US$8bn bridge loan that is fully guaranteed, so construction could start while the long-term 15.5-year financing was still being worked out. And after almost 1.5 years since the RFP was launched, the completion of a multi-tranche debt package with almost 30 commercial banks and ECAs participating is remarkable.

It has two borrowers – Pengerang Refining Co and Pengerang Petrochemical Co – which together are called PRefchem. The lenders on both are the same, there is a cross-guarantee and they are treated on pari passu basis.

The project cost is US$15.3bn and the debt is US$9.5bn, giving it a debt to equity ratio of 62:38. Of this, a huge US$5.63bn tranche is uncovered, and yet that attracted some 20 commercial banks as mandated lead arrangers. These are Ambank, ANZ, BNP Paribas, Bank of China, Credit Agricole CIB, China Construction Bank, CIMB Bank, Citibank, HSBC, ICBC, JP Morgan, Maybank, Mizuho Bank, MUFG, National Bank of Kuwait, OCBC, Standard Chartered Bank, Societe Generale, SMBC and UOB.

The ECA tranches are a US$1.5bn JBIC/Nexi tranche with Japan Bank of International Corporation, Citibank, Mizuho Bank, MUFG and SMBC; a US$789m Kexim/K-Sure tranche with Korea Export-Import Bank, ANZ, BNP Paribas, Bank of China, Credit Agricole, DZ Bank, JP Morgan, Mizuho Bank and National Bank of Kuwait; a US$794m SACE of Italy tranche with Bank of China, BNP Paribas, DZ, HSBC and JP Morgan; and a US$800m CESCE of Spain tranche with Banco Santander, BNP Paribas, DZ Bank, HSBC, JP Morgan, Natixis and SG.

BNP Paribas is financial adviser and legal advisers are White & Case for Aramco and Shearman & Sterling for Petronas. The lenders had Milbank (international) and Christopher & Lee Ong (Malaysia).

Bond Deal of the Year – Mong Duong

A refinancing bond issue in a frontier market such as Vietnam would usually face scepticism but a 5x oversubscription to the US$678.5m 5.125% 9.8-year senior secured bond issue by SPV Mong Duong Finance Holdings was a surprise, and that brought some hope for other similar projects. The Mong Duong refi bond is PFI’s Asia-Pacific bond deal of the year.

The bond issue was rated Ba3/BB (Moody’s/Fitch) in line with the sovereign, and came with a US$484.7m loan facility to match the project loans of by AES-VCM Mong Duong Power (MDP).

This is indeed a market first in Vietnam and represents the first time a combination of project bonds and traditional bank debt has been used to repackage an existing project financing for an IPP in Vietnam.

It took advantage of a conducive market window in light of a dovish central bank policy, according to one of the leads. A two-team roadshow was organised in Singapore, Hong Kong, London, New York, Boston, and Los Angeles to minimise market risk ahead of the FOMC meeting due after that.

The proceeds from these two facilities will be used to take out the outstanding amount of about US$1.08bn from an 18-year US$1.462bn debt facility raised in 2011 by MDP to fund the development of the power plant project. The project is a 1,120MW sub-critical coal-fired power plant located 220km east of Hanoi in the Quang Ninh Province of Vietnam. It has been operational since 2015 providing baseload supply to the region.

MDP has a robust tariff structure that helps in the recovery of capital costs and the pass-through of foreign exchange and fuel costs under a 25-year PPA that expires in 2040. It also enjoys an assurance from the Vietnamese government of a reliable and timely payments to MDP, if and when required, under the government guarantee and undertaking agreements (GGU) and the build-operate-transfer (BOT) contract. State-owned miner Vinacomin also has an agreement to supply coal to MDP at a government-regulated price for the life of the project.

The MDP sponsors are AES Corporation, Posco Energy, and China Investment Corp. Citigroup and HSBC were joint global coordinators as well as joint bookrunners with SMBC Nikko and Standard Chartered. The issuer had Shearman & Sterling as international counsel, VILAF as Vietnamese counsel and NautaDutilh as Dutch counsel. Allen & Overy was counsel to the underwriters and trustees.

Transport Deal of the Year – Cross River Rail

The US$3.2bn Cross River Rail project in Brisbane, Queensland is one of the most ambitious infrastructure projects attempted by the state and involves three different but related packages. It is PFI’s Asia-Pacific Transport Deal of the Year.

The Tunnel Stations & Development (TSD) public-private partnership will deliver the underground section of the project, including the tunnel from Dutton Park to Normanby and construction of four underground stations at Boggo Road, Woolloongabba, Albert Street and Roma Street. TSD will provide a property development opportunity above Albert Street station.

The A$2.3bn debt funding for the PPP part of the project was provided by BBVA, Credit Agricole, HSBC, Intesa Sanpaolo, Norinchukin, Societe Generale, Standard Chartered, SMBC and Sumitomo Mitsui Investment Trust. The Pulse consortium comprising CIMIC, Pacific Partnerships, CPB Contractors, UGL, Ghella, DIF, and BAM are the sponsors of the PPP project.

The TSD package has extensive and complex interfaces with the other Cross River Rail packages, existing and future projects, government entities and utilities. A critical challenge for all parties involved accurately mapping these interfaces and developing practical arrangements, with sufficient flexibility to accommodate changes over multiple work fronts over time.

The Rail Integration & Systems (RIS) part of the project will be delivered as an alliance contract by UNITY Alliance. UNITY comprises CPB Contractors, UGL, Aecom and Jacobs, and partners HASSEL, RCS Australia, Acmena, Martinus Rail and Wired Overhead Solutions.

The European Train Control System (ETCS) will be delivered by Hitachi Rail STS. Cross River Rail is a 10.2km rail line running from Dutton Park to Bowen Hills, which includes a 5.9km twin tunnel under the Brisbane River and CBD.

Early works for the project have been under way since August 2017. Work on the TSD package has now commenced, with major construction works for the Cross River Rail project due to be completed in 2024.

The Queensland government is providing funding during the construction stage of about 50% of the construction costs and will provide a debt paydown two years after construction that will be around 50% of the debt.

The advisers to the Queensland government included Clayton Utz legal and KPMG financial. Corrs was the legal adviser to the Pulse Consortium and Macquarie was the financial adviser. The banks were advised by Allens.

PPP Deal of the year – Sydney Metro

The Sydney Metro project is touted as Australia’s biggest public transport project and there is no denying that in scale and size it currently ranks as one of the country’s major infrastructure projects. It is PFI’s Asia-Pacific PPP Deal of the Year.

The Sydney Metro City & Southwest project is Stage 2 of the project and costs are not finalised but expected to be in the A$13bn (US$8.8bn) range. The A$8.3bn Sydney Metro Northwest, which is now operating, is Stage 1.

Both projects are being delivered by the Northwest Rapid Transit (NRT) consortium, comprising MTR (27.55%), Caisse de depot et placement du Quebec (24.9%), Marubeni (20%), Plenary (17.55%) and Pacific Partnerships (10%). Legal adviser to the banks is KWM and legal adviser to consortium is Allens. The legal adviser to the government is Ashurst and the financial adviser is EY.

The Sydney Metro City and Southwest stage of the PPP project was funded just before Christmas. The debt funding included A$1.7bn for new trains and core rail systems as well as a A$2bn operations and maintenance component for NRT to operate the combined North West and City and Southwest lines until 2034. The deal also involved refinancing of Stage 1 of the project.

The eight-year bank debt for Stage 2 is being provided by ANZ, Credit Agricole, HSBC, ING, Intesa Sanpaolo, KfW, Mizuho, MUFG, NAB, OCBC, SMBC, UOB and Westpac. Margins are said to be in the low 100s. The refinancing of Stage 1 involved a seven-year A$1.55bn facility.

The debt was last refinanced in September 2014 involving ANZ, National Australia Bank, Westpac, MUFG, HSBC, ING Bank, Mizuho Bank, OCBC, Standard Chartered Bank. Construction work is under way, and the line is expected to be operational from 2024.

Sydney Metro City & Southwest will extend the metro rail from Sydney’s booming North West, beneath Sydney Harbour, through new underground CBD stations, and beyond to Bankstown. The New South Wales government is self-funding the new tunnels under the harbour.

To see the digital version of this report, please click here

To purchase printed copies or a PDF of this report, please email

  • Print
  • Share
  • Save