OCBC Bank partners Tong Eng Group on Singapore's first SORA-based green loan
Singapore property developer, Tong Eng Group (“Tong Eng”), has secured Singapore’s first green loan referencing the Singapore Overnight Rate Average (SORA) with OCBC Bank. The proceeds from the green SORA-based loan will be used for the refinancing of Tong Eng Building, which received the Building and Construction Authority (BCA) Green Mark Platinum re-certification last month.
This is also OCBC Bank’s third SORA-based corporate loan, with the first two extended to CapitaLand and Sembcorp Industries in June and October respectively. It had introduced the first SORA-based retail home loan in July.
To date, OCBC Bank has extended more than S$1.3 billion in corporate and retail loans referencing SORA, which includes close to S$1 billion in SORA-based home loans.
The interest rate of this S$71 million revolving loan facility will be calculated based on the 3-month Compounded SORA published by the Monetary Authority of Singapore (MAS), as well as an applicable margin. Tong Eng will be informed on the first day of the loan, and thereafter, on each rollover of the loan, of the amount of interest due on their outstanding loan at the end of an interest period. This “compounding in-advance” methodology provides better visibility and therefore facilitates cashflow planning with regard to interest payment.
This green SORA-based loan was raised under Tong Eng’s newly established Green Loan Framework (“Framework”), which was developed together with OCBC Bank as Green Loan Advisor. The Framework was prepared in accordance with the Green Loan Principles.
In obtaining the Building and Construction Authority Green Mark Platinum Award for Tong Eng Building, Tong Eng has incorporated several green features that has resulted in energy savings including the replacement of the original water cooled packaged units with chillers and air handling units coupled with smart control strategies which resulted in tremendous energy savings. The air handling units at each floor were also installed with controls to monitor carbon dioxide levels to regulate fresh outdoor air intake, in order to achieve a high level of indoor air quality.
Other sustainable features included installation of motion sensors fitted to the common area lighting as well as retrofitting tenant units with LED energy saving light fixtures.
Separately, Tong Eng undertook an extensive lift upgrading exercise, where all the lifts were fitted out with new technology motors, drives and controllers for optimum operation of the lifts.
Said Mr. Teo Tong Lim, Managing Director of Tong Eng Group, “We are pleased to have the support of OCBC on this SORA-based green loan, which is the first of its kind. Besides furthering our sustainability strategy, this loan is also an important step for us in transitioning our loan book to backwards looking rates – an inevitable shift that many businesses will have to undertake. Beginning this process early has given us a better understanding of the pricing of such loans, and the operational changes that have to be made, to prepare for the period after the cessation of SOR.”
Said Mr Linus Goh, Head of Global Commercial Banking, OCBC Bank, “We are delighted to support our long-standing customer Tong Eng in their first green loan. Choosing to launch this loan with the refinancing for the Tong Eng Building, which has been a fixture in the Central Business District since the 1980s, is an important signal of intent and a timely reminder that mature buildings can and should strive towards meeting today’s sustainability standards.
“This is also the first SORA-based green loan, and Tong Eng takes the lead as one of the early adopters of the new industry interest rate benchmark. This is consistent with their forward-thinking mentality which we hope will encourage other businesses to begin this transition to the new rate sooner rather than later.”