BRI, Bank Rakyat Indonesia has become the first Asia financial sector launching SLL (sustainability-liked loan). The state-owned lender expects that there would be more borrowings using this scenario from the bloc. Their purpose is to attain the government’s sustainable development goals. The bank has pulled $1bn multi tranche SLL to boost many sectors. Some of them are environmental, social, as well as governance credentials. Plus, they plan to add large loans especially for Indonesian state-owned enterprises.
Based on the information, BRI is going to be the state-owned electric utility. Thus, the bank is seeking SLL debut for more than $750m with more than five years tenor. A Singapore-based loan syndication noted that Indonesian SOEs now flock to more ESG. He added that they are aware about it as well as appreciate it. Although they are not there yet in setting pathways, SOEs would refer more to the government’s guidance. Bankers also argued that FIs would likely focus more on the ESG social perspectives.
In BRI alone for instance, the SLL brings 2bp reduction in the margin only if it gains the sustainability performance. This is the target required for the bank in order to gain a certain percentage of microfinance loans. Therefore, if the firm failed to do as required, the margin would escalate by 2bp. BRI loans us basically the second financing in the Asia banking sector. It complies with the framework of SLL. Plus, it is from Loan Market Association, Asia Pacific Loan Market Syndications and Trading Associations. South Korea’s Shinhan Bank for instance has raised $400m five year SLL earlier after interacting with 18 banks in general syndication.