The loan is one of the largest sustainability-linked loans in Singapore and is the first one for Singapore’s energy sector.
DBS Bank and OCBC Bank have issued a seven-year S$700 million ($504 million) sustainability-linked loan to a joint venture of Keppel Infrastructure Trust (KIT) and Keppel Energy (KE) for its Keppel Merlimau Cogen Plant.
According to a press release on Wednesday, the loan is linked to carbon emission targets for the gas-fired co-generation power plant, which includes benchmarking of the plant’s carbon emissions intensity against national indices, as well as demonstrating ongoing improvement in the plant’s carbon emissions intensity.
If these targets are met, the interest rate on the facility will be subsequently reduced on a tiered basis, the announcement said.
Landmark Transaction
«With Keppel Infrastructure Trust’s strong leadership in the energy sector and commitment to continuously improve the efficiency of their existing infrastructure, we are confident that this transaction will pave the way for more energy players to step forward,» Elaine Lam, head, global corporate banking, OCBC Bank, said about the deal.
«The transaction also marks an important step towards building a clean, affordable and reliable energy future in Singapore by providing interest savings when pre-agreed ESG targets are met, while financing the development and implementation of less carbon-intensive energy solutions,» Hong Teck Khiam, head of power and utilities, institutional banking, DBS Bank, added.
