OCBC Bank backs U-Ming’s sustainable fleet renewal with $70m loan
Singapore’s OCBC Bank has extended a $70m sustainability-linked loan to Taiwanese dry bulk shipping operator U-Ming Marine Transport. The loan will be used to fund U-Ming’s fleet renewal plan, which includes the construction of two new 210,000 dwt bulk carriers in China due for delivery in the last quarter of 2022.
The loan was structured so that U-Ming will enjoy interest rate reductions if it meets pre-agreed targets in two areas: reduction in emission intensity, by measuring U-Ming’s Fleet Annual Efficiency Ratio; and achieving an annual increase in the proportion of its fleet that obtains a satisfactory emissions rating from a third party maritime due-diligence organization, RightShip. The new vessels will have an optimised hull design, feature MAN 6G70ME-C10.5 Tier3 engines, be coated with ultra-low-friction paint, and have a fleet safety management system designed by U-Ming.
“This sustainability linked loan from OCBC Bank further demonstrates U Ming’s long-term commitment to transforming our vessels into a modern, environmentally-friendly fleet which fully complies with the IMO carbon reduction targets. We know this is something our customers want to see and so we are working with them to ensure we are making continuous progress towards achieving this,” said CK Ong, U-Ming president.
“Interest in the decarbonisation of shipping has been gaining momentum as the world acts towards achieving net-zero by 2050. This sustainability-linked loan with U-Ming is pegged to clear emissions targets that will help realise this vision, and it demonstrates OCBC’s commitment as a signatory to the Poseidon Principles,” added Elaine Lam, OCBC Bank’s head of global corporate banking.
The deal marks a first for both companies, as this is the first sustainability-linked loan that OCBC Bank has extended to a Taiwanese company, and in U-Ming’s case, its first sustainability-linked loan outside of Taiwan. In structuring the sustainability-linked loan, U-Ming also engaged an external reviewer, DNV, to ensure the targets are aligned with the Sustainability-Linked Loan Principles 2021 published by Asia Pacific Loan Market Association, Loan Market Association and Loan Syndications and Trading Association.
