Knowledge Highlights 9 December 2020
On 24 November 2020, the Monetary Authority of Singapore (“MAS”) announced the launch of the Green and Sustainability-Linked Loan Grant Scheme (“GSLS”). The GSLS seeks to support corporates of all sizes to obtain green and sustainable financing and encourage banks to develop green and sustainability-linked loan frameworks to make such financing more accessible to small and medium-sized enterprises (“SMEs”). The GSLS is the first of its kind globally and will take effect on 1 January 2021.
The GSLS is an initiative under MAS’ Green Finance Action Plan, and will aid MAS in its aim to develop green and sustainable financial markets and products to support Asia’s transition to a low-carbon future.
Enhancing corporates’ ability to obtain green and sustainability-linked loans
The GSLS will enhance corporates’ ability to obtain green and sustainability-linked loans. The grant will cover expenses incurred by corporates to engage independent sustainability assessment and advisory service providers to:
- develop green and sustainability frameworks and targets;
- obtain external reviews (which include a second party opinion, verification, certification or rating); and
- report on the sustainability impact of the loan.
MAS will defray up to S$100,000 of these expenses per loan over a three-year period.
Encouraging banks to develop frameworks for green and sustainability-linked loans
In addition, the GSLS will encourage banks to develop frameworks for green and sustainability-linked loans. The grant will cover expenses incurred by banks to engage independent sustainability assessment and advisory service providers to develop frameworks, obtain external reviews, and report on the allocated proceeds of loans originated under the framework. MAS will defray up to 60% of these expenses, capped at S$120,000 over a period of three years, for such green and sustainability-linked loan frameworks.
Where the framework being developed is specifically targeted at SMEs and individuals, MAS will defray by 90% the expenses incurred by the bank, capped at S$180,000 over a period of three years per framework. This is aimed at further encouraging banks to provide greater support to SMEs, which are a key driver of economies, and enabling individuals to contribute to the sustainability agenda by integrating sustainability considerations in their financing decisions.
Expansion of Sustainable Bond Grant Scheme to include sustainability-linked bonds
Effective 24 November 2020, the scope of the existing Sustainable Bond Grant Scheme (“SBGS”) has been expanded to include sustainability-linked bonds. Beyond the grant support for pre-issuance costs which have been covered under the SBGS since 2017, the enhanced SBGS now covers the post-issuance costs of engaging independent sustainability assessment and advisory service providers to obtain external reviews or reports for bonds under the scheme.
The following materials are available on the MAS website www.mas.gov.sg:
Our experience in green and sustainable financing
Allen & Gledhill has been involved in advising on a number of recent landmark green and sustainability-linked bonds and loans, including those set out below.
- Frasers Property’s S$785 million green loan facilities for Northpoint City
- Mapletree Commercial Trust’s S$670 million green loan facilities for Mapletree Business City II
- US$500 million floating rate green bonds by DBS Group Holdings, the first financial institution in Singapore to issue green bonds
- A$500 floating rate green notes by Oversea-Chinese Banking Corporation, the first green bond issuance by the bank
- Frasers Property’s and China Construction (South Pacific) Development Co’s S$350 million green loan facilities for the Fernvale Lane residential project. This is the first green loan for a residential executive condominium in Singapore
- S$300 million sustainability-linked term and revolving loan facilities granted to CapitaLand, the first loan in Singapore that is pegged to the Singapore Overnight Rate Average rates
- S$300 million inaugural green bonds by the National University of Singapore, the first university in Asia to launch a framework on sustainability-linked finance and to issue a green bond
- S$100 million green bonds and S$300 million fixed rate subordinated green perpetual securities by HSBC Institutional Trust Services, the first real estate green perpetual securities issued in Asia, in its capacity as trustee of Ascendas Real Estate Investment Trust, under its newly established Green Finance Framework