Bayfront Infrastructure Capital II
Bayfront Infrastructure Capital II Pte. Ltd. (“BIC II”) is Bayfront’s second offering of Infrastructure Asset-Backed Securities (“IABS”) that was priced in June 2021. BIC II issued 5 classes of rated Notes that are listed on the Singapore Exchange and an unrated equity tranche that is majority (c.75%) retained by Bayfront, offering investors exposure to a pre-assembled portfolio of marquee project and infrastructure loans to borrowers in Asia-Pacific, the Middle East and South America.
The BIC II transaction also featured the world’s first publicly issued securitisation sustainability tranche backed by eligible green and social assets (as defined in Bayfront’s Sustainable Finance Framework). The sustainability tranche has been recognised by the Singapore Exchange for meeting recognised standards for green, social or sustainability fixed income securities.
Investor Relations
Offering Document
Moody’s Rating Reports
Payment Date and Investor Reports
Audited Financial Statements
Issuance
Five classes of Notes
The Class A1 Notes, Class A1-SU Notes, Class B Notes, Class C Notes and Class D Notes are rated by Moody’s and listed on the Singapore Exchange. The Preference Shares are held 75% by Bayfront as Sponsor of the transaction, and 25% by a third-party investor.
| Class | Amount Issued (US$ million) |
Amount Outstanding2 (US$ million) |
Issue Ratings (Moody’s) |
Spread3 | Legal Maturity Date | |
|---|---|---|---|---|---|---|
| Original | Current | |||||
| A1 | 176.9 | 109.0 | Aaa (sf) | Aaa (sf) | 125 bps | 11-Jan-2044 |
| A1-SU | 120.0 | 73.9 | Aaa (sf) | Aaa (sf) | 120 bps | 11-Jan-2044 |
| B | 33.3 | 33.3 | Aa1 (sf) | Aaa (sf) | 185 bps | 11-Jan-2044 |
| C | 22.1 | 22.1 | A3 (sf) | Aa3 (sf) | 235 bps | 11-Jan-2044 |
| D | 8.8 | 8.8 | Baa3 (sf) | A3 (sf) | 340 bps | 11-Jan-2044 |
| Pref Shares1 | 40.1 | 40.1 | Not rated | Not rated | N.A. | - |
1 US$30.1 million of the Pref Shares are retained by Bayfront; and US$10 million of the Pref Shares are held by a third-party investor.
2 As of 11 January 2024
3 Spread is originally applied over 6 months LIBOR. Effective 11 July 2023, the base rate of the Notes will switch from LIBOR to Daily Non-Cumulative Compounded SOFR plus credit adjustment spread of 42.826 bps.
Key Transaction Parties
Bayfront is the Sponsor for BIC II.
As Sponsor, Bayfront was responsible for:
- sourcing of the Portfolio from the Originating Banks and executing loan transfers, including initial screening, credit analysis, due diligence and documentation;
- liaising with credit rating agencies to obtain credit assessments on the portfolio assets and credit ratings for the Class A1, A1-SU, B, C and D notes (“Rated Notes”); and
- leading the structuring and execution of the transaction, including resourcing arrangements, investor marketing and distribution, together with the Joint Global Coordinators.
BIM Asset Management Pte. Ltd. (“BIMAM”) is the Collateral Manager for BIC II.
As Manager, BIMAM is providing certain investment management, administrative and advisory functions for BIC II which includes:
- managing and monitoring the performance of the portfolio assets;
- maintaining credit assessments on the portfolio assets and credit ratings of the Rated Notes;
- handling any replenishment and disposition of the assets (if required);
- handling all voting requirements, consents, amendments, modifications, waivers or any other notices for the portfolio assets;
- providing information available to the Transaction Administrator and ensuring that the Transaction Administrator operates the Priority of Payments and reporting requirements in a timely and accurate manner;
- providing management services including periodic investor reporting, treasury, compliance and budgeting requirements (in conjunction with the Transaction Administrator); and
- acting as primary interface with investors, banks, borrowers, multilateral financial institutions, export credit agencies and other stakeholders, including investor relations.
Apex Fund and Corporate Services Singapore 1 Pte. Limited is the Transaction Administrator for BIC II, performing portfolio administration and reporting services. DB International Trust (Singapore) Limited is acting as Trustee and DBS Bank Ltd. as the Account Bank.
The Issuer (BIC II) is a wholly owned subsidiary of the Sponsor (Bayfront). Bayfront holds all of the ordinary shares and preference shares in BIC II.
Transaction Features and Highlights
- 27 project and infrastructure loans across 25 projects in Asia Pacific, Middle East and South America
- 13 countries of project and 8 industry sub-sectors
- 84% of the portfolio at inception relates to operational projects, while the remaining 16% relates to projects in advanced stages of construction and which benefit from appropriate credit mitigants, such as sponsor completion guarantees or sponsor support
- 58% of the portfolio at inception are investment-grade assets, with a Moody’s Rating Factor of 610 (Baa3) or lower
- Stringent review and credit approval processes – firstly by the originating banks, an any export credit agencies and multilateral financial institutions providing credit support, and secondly by Bayfront as part of its due diligence process when acquiring the loans as sponsor
- Detailed analysis undertaken by credit rating agencies to assign credit estimates for each underlying loan
- Alignment of interests with Bayfront acting as the sponsor and majority (c.75%) investor in first-loss tranche
- Deep portfolio management expertise, with BIMAM acting as the collateral manager for BIC II
- Static pool with limited replenishment rights within a 3-year reinvestment and 3-year non-call period
- Offtake agreements with reputable and creditworthy counterparties such as major global corporates, state-owned enterprises and government-linked sponsors
- Natural FX hedge – US$-denominated assets and liabilities
- 30% of the Notes issued are to be fully allocated to a portfolio of eligible green and social assets that meet the eligibility criteria stated in Bayfront’s Sustainable Finance Framework
- 26% of the portfolio at inception relates to renewable energy assets, enhancing BIC II’s green footprint from the previous BIC transaction that was issued in 2018
Overview of the Portfolio
The Portfolio is diversified across 27 project finance and infrastructure loans, spread among 8 industry sub-sectors, and located in 13 countries across Asia-Pacific, the Middle East and South America. The Portfolio is backed by 25 projects with stable and predictable long-term cash flows, including through offtake agreements entered with reputable and creditworthy counterparties including major global corporates, state-owned enterprises and government or government-linked sponsors.
Bayfront believes that this Portfolio is broadly representative of the recent geographical and sectoral activity in the project and infrastructure finance industry across the Asia-Pacific, Middle East and South America regions. Accordingly, Bayfront believes that the diversification within the Portfolio is a significant mitigant to geographical, industry or business-cycle risks.
By Country of Project
Based on geographical project location
By Country of Risk
Based on ultimate source of payment risk
By Sector
By Credit Enhancement
1 MFI supported loans include B Loans
By Ratings Distribution
By “Deep” Emerging Markets Exposure2
27% of the portfolio is exposed to deep EM exposure (within this, 15% receive credit enhancement support)
2 Defined as countries rated Ba3 and below by Moody’s. Includes Bangladesh, Cambodia, Papua New Guinea and Vietnam.
ECA = Export Credit Agency; NHSFO = Non-Honouring of Sovereign Financial Obligation guarantee, provided by the Multilateral Investment Guarantee Agency (MIGA, member of the World Bank Group); PRI = Political Risk Insurance provided by MIGA
By Commodity Price Exposure
13% of the portfolio is exposed to commodity price risk, while remaining 87% are underpinned by robust availability-based or fixed price offtake or charter contracts
By Construction Risk
16% of the portfolio is nearing completion, but this entire portion is supported by explicit and irrevocable sponsor guarantees
Portfolio Selection Principles
The following are the key selection principles that Bayfront has applied in selecting and constituting the Portfolio:
Structure and Sourcing
- Sourced from 14 leading international and regional commercial banks and from Clifford Capital
- Focused on projects in Asia-Pacific, the Middle East and South America that are operational or in advanced stages of construction, but which benefit from appropriate credit mitigants, such as completion guarantees
- Material portion supported by export credit agencies, multilateral financial institutions and project sponsors through various forms of credit enhancement (e.g. guarantees and insurance)
- Focused on availability-based infrastructure assets
- Integrated LNG, other oil and gas, metals and mining sub-sectors subject to concentration limits
Cashflows
- Predominantly US$-denominated floating rate loans, reflecting the US$ payment profile for interest and principal on the Notes issued
- Fixed loan repayment schedules providing certainty on cash flows
Sustainability Tranche
BIC II featured the world’s first publicly issued securitisation with a dedicated sustainability tranche, in the form of the Class A1-SU Notes.
- 30% of the Notes issued are to be fully allocated to a portfolio of eligible green and social assets that meet the eligibility criteria stated in Bayfront’s Sustainable Finance Framework
- 26% of the portfolio at inception relates to renewable energy assets, enhancing BIC II’s green footprint from the previous BIC transaction that was issued in 2018
DNV Business Assurance Singapore Pte. Ltd. has provided a sustainability bond pre-issuance eligibility assessment on the Class A1-SU Notes.
Corporate Citizenship Southeast Asia Pte. Ltd. has prepared post-issuance impact reporting on the sustainable assets.
Sustainability Tranche Impact Report – FY2021
The Class A1-SU Notes have also been recognised by the Singapore Exchange for meeting recognised standards for green, social or sustainability fixed income securities.
Asset Pool by Original Loan Commitments
| Green Asset Category | Use of Proceeds | USD (millions) |
|---|---|---|
| Renewable energy | Solar energy | 47.4 |
| Wind energy | 41.1 | |
| Run-of-river hydropower | 14.0 |
| Social Asset Category | Use of Proceeds | Social Benefit | Target Population | USD (millions) |
|---|---|---|---|---|
| Affordable basic infrastructure | Desalination | Climate resilient drinking water supply | Residents in Qatar, United Arab Emirates, Kuwait and Saudi Arabia | 45.0 |
| Transmission and distribution | Access to electricity | Residents in villages from North Phnom Penh to Kampong Chan, Cambodia | 17.0 | |
| Roadway upgrades | Road Safety Improvements; Improved access to impoverished areas | Residents along the corridor supported by the highway in a Southeast Asian country classified as a Developing Member Country by Asian Development Bank | 20.3 | |
| Total | 184.8 |
Investor Profiles
By Investor Type
By Geography
Notes issued by Bayfront Infrastructure Capital II Pte. Ltd. (“BIC II Notes”) may not be offered or sold within the United States.
(a) The Information Memorandum relating to the BIC II Notes, and (b) general information (collectively, the “Information”) contained herein is for information purposes only. It neither constitutes an offer nor an invitation nor a recommendation to subscribe for or to purchase, to hold or sell notes, nor is the Information contained herein meant to be complete or to serve as a basis for any kind of obligation, contractual or otherwise. The Information posted on this page is being provided as a historical, reference source only and is not being used, and no one is authorized to use, disseminate or distribute it, in connection with any offer, invitation or recommendation to sell or issue, or any solicitation of any offer to purchase or subscribe for, notes. The Information is current only as at its date and such availability of the Information on this website shall not create any implication that there has been no change in Bayfront Infrastructure Capital II Pte. Ltd.’s affairs since the date of the Information or that the information, statements or opinions contained therein are current as at any time subsequent to such date. Bayfront Infrastructure Capital II Pte. Ltd. is under no obligation to update the information on this page. The Information may contain forward-looking statements, estimates and projections. Such statements, estimates and projections are not guarantees of future performance and undue reliance should not be placed on them.