(Bloomberg) -- State-owned Bank Rakyat Indonesia is marketing a $1 billion syndicated loan, offering its lowest-ever interest margin for the three-year tenor in a market lacking deals.
The financial institution is paying a margin of 70 basis points above the risk-free Secured Overnight Financing Rate, according to a person familiar with the matter. Its previous loan in 2022 offered five basis points more for the tenor. The SOFR is the reference for most of the deals in Asia.
The transaction is also one of the more finely-priced deals to have emerged from the sector in Asia in the past five years. Australia’s Macquarie Bank was the last financial institution to raise the region’s cheapest loan in May 2019, pricing a $862.5 million three-year facility at a margin of 50 basis points over SOFR’s predecessor, the London Interbank Offered Rate, according to Bloomberg-compiled data.
Bank Rakyat Indonesia is aiming to push margins lower in a market facing a shortage of deals as banks scout for quality transactions to underwrite or join. Dollar loan volume, excluding bilateral facilities, tumbled 44% to about $45.5 billion in the first half of the year across Asia excluding Japan. That’s the lowest since 2010, according to data compiled by Bloomberg.
The competitive landscape among banks is evident in Keywords Studios Plc’s $1.14 billion loan, which attracted participation from as many as 19 banks, highlighting the intense competition for mandates in Asia.
Bank Rakyat Indonesia’s $1 billion facility includes a $800 million tranche, the proceeds of which will fund new or existing eligible social projects. This so-called social loan is a debut for the bank.
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