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Saturday, 21 July 2018

Indonesia Loan House

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Indonesia was a welcome bright spot in Asia’s syndicated loan market in 2017, following its reinstatement to full investment-grade status, and Sumitomo Mitsui Banking Corp was in the thick of the action.

The bank captured more than its fair share of the money flows, arranging both capital expenditure deals and new money facilities, and covering both local and international currencies.

SMBC has historically maintained a low profile in Asia’s syndicated loan market, being labelled a conservative Japanese bank that deals primarily with high-grade clients while cautiously extending balance sheet. But in recent years the bank has stepped up its game and has continued to evolve by exploring pockets of growth in search of yield.

In Indonesia, SMBC has raised its profile as a leading loan arranger, covering a full range of sectors, structures and currencies. The bank was the top bookrunner of international loans over IFR’s review period, recording volumes of US$545m via six deals, while in the local currency segment it ranked second of all foreign banks, having led the equivalent of US$377m as a bookrunner, according to Thomson Reuters LPC data.

SMBC’s highlights included a US$575m five-year loan for Trans Retail Indonesia, which attracted 25 banks in general syndication, and a US$560m seven-year refinancing of an acquisition loan backing the 2016 purchase of the Martabe gold mine – both repeat mandates.

It also featured on the US$750m-equivalent six-year club loan for Indonesian independent power producer Paiton Energy – part of a larger US$2.75bn refinancing package that completely revamped the company’s capital structure. The deal was far from straightforward given that the loan needed to sit alongside a secured bond, but SMBC sought to underwrite a bigger portion of the recapitalisation exercise, even offering to backstop the bond if required.

SMBC won a rare sole mandate in the rupiah market in 2017 with its first rupiah-denominated financing for state-owned general contractor Waskita Karya, widening the company’s investor base and opening up a new market for foreign banks. The Rp5trn (US$377m) five-year loan attracted a diverse group of eight banks that included South Korean, Chinese and Taiwanese lenders. Elsewhere, SMBC secured a repeat sole mandate for Bank Tabungan Pensiunan Nasional, which signed a US$250m 360-day loan in September. The facility, which was oversubscribed, was increased from an initial size of US$155m and attracted 18 banks.

The bank also brought Indonesian auto finance company Astra Sedaya Finance to the Japanese market as one of the mandated lead arrangers and bookrunners on a US$200m three-year financing. The deal attracted 11 other banks – many of them new relationships for the borrower – and was more than doubled from an initial target of US$90m.

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