Siam Commercial Bank is participating in a US$380 million (Bt12.5 billion) syndicated loan to Strait Asia Resources, a Singapore-listed unit of energy conglomerate PTT.
"Big corporations are expanding more overseas as domestic operations cannot sustain growth. Financial institutions must proceed in line with the trend. SCB is ready to take part in lending for overseas expansion," Thun Reansuwan, executive vice president for corporate finance and capital markets, said yesterday.
SCB is also ready to offer funding to Banpu to finance regional mergers and acquisitions, while Banpu plans to invest in the Hongsa power plant, but the deal is not finalised yet.
SCB expects to meet the 11-15 per cent corporate loan growth target for this year, thanks to the overseas drive led by PTT, Central Pattana, Banpu and Charoen Pokphand Group. Last year, its outstanding loans reached Bt800 billion.
The Map Ta Phut fiasco is a catalyst for this exodus, as some petrochemical groups are considering putting up plants in regional countries to diversify investment risk.
"As companies are on a more aggressive drive towards overseas investment, banks need to come up with more sophisticated structured deals. The international standards should enable our competitiveness in the regional level," Thun said.
Joining the syndication for Strait Asia Resources are Bangkok Bank, Krung Thai Bank and Standard Chartered Bank (Thai). SCB and Krung Thai Bank each contribute 35 per cent of the five-year loan. The interest rate is based on the sixth-month London Interbank Offered Rate, currently about 0.25-3 per cent.
Strait Asia Resources operates a coalmine in Indonesia. The funding, inclusive of $130 million working capital, will be used to refinance short-term debts.
Thun said the bank believes that Strait Asia Resources is in a position to finance the debt, as its coal mining capacity will be raised from 8.6 million tonnes last year to 19 million tonnes this year. As a unit of PTT, its credit strength is high.
Coal demand is expected to keep rising, thanks to its cheaper cost compared to natural gas and oil, especially when crude oil is expected to average over $80 per barrel this year, he added.
