Bayfront prices USD 410.3 million infrastructure asset-backed securities: GuarantCo guarantees Class D tranche fully subscribed by funds managed by Apollo

  • Date written
  • September, 2023

Bayfront prices USD 410.3 million infrastructure asset-backed securities: GuarantCo guarantees Class D tranche fully subscribed by funds managed by Apollo

  • Fourth IABS issuance by Bayfront Infrastructure Management (Bayfront), emphasising its commitment to be a repeat, programme-based issuer of IABS.
  • First ever collaboration between Bayfront and GuarantCo, part of the Private Infrastructure Development Group, in guaranteeing one of the debt tranches of the capital structure (Class D for this issuance), helping to support the financing or refinancing of sustainable infrastructure projects and infrastructure debt.
  • Funds managed by Apollo Global Management (Apollo) subscribed to the Class D tranche, its first-ever investment in an IABS issuance by Bayfront.
  • First ever collaboration between Bayfront and the UK FCDO (in connection with its MOBILIST programme) in supporting the equity tranche of the capital structure and mobilising public capital investments for infrastructure financing in Asia.
  • The AIIB participated in the transaction as an anchor investor for the third time.

 

Bayfront, a platform designed for institutional investors to access Asia-Pacific infrastructure debt, is pleased to announce the successful pricing of its fourth Infrastructure Asset-Backed Securities (IABS) transaction through Bayfront Infrastructure Capital IV Pte. Ltd. (BIC IV), a wholly owned and newly incorporated distribution vehicle. Bayfront’s shareholders are Clifford Capital Holdings (CCH) and the Asian Infrastructure Investment Bank (AIIB).

Bayfront has made a commitment to be a frequent issuer of further IABS transactions, providing investors access to a diversified portfolio of project and infrastructure debt across the region, in addition to green and social assets, to help address the infrastructure financing gap in Asia Pacific. Bayfront previously structured and placed three transactions: Bayfront Infrastructure Capital (BIC) in July 2018, Bayfront Infrastructure Capital II (BIC II) in June 2021 and Bayfront Infrastructure Capital III (BIC III) in September 2022.

BIC IV features a portfolio size of approximately USD 410.3 million spread across 40 individual loans/bonds, 33 projects, 15 countries and 10 industry sub-sectors. Five classes of notes, totalling USD 384.7 million (Class A1, Class A1-SU, Class B, Class C and Class D), were offered to institutional investors. The Class A1-SU Notes, being the dedicated sustainability tranche, will be issued under the Bayfront Sustainable Finance Framework dated August 2023 (the Framework).

Whilst the Class A1, Class A1-SU, Class B and Class C Notes are rated investment grade by Moody’s and would be listed on the Singapore Exchange, the Class D Notes amounting to USD 13 million, that are unrated and unlisted, benefit from a guarantee from GuarantCo which is rated A1 by Moody’s and AA- by Fitch, for principal and interest amounts payable. The provision of the guarantee by GuarantCo in relation to the Class D Notes helps to support the financing or refinancing of sustainable infrastructure projects and infrastructure debt as permitted by PIDG’s investment policy. The Class D Notes were pre-placed and taken up in full by funds managed Apollo, a global asset manager. This is Apollo’s first investment in IABS issuance from Bayfront and first-time Apollo has invested in a guaranteed debt issuance from GuarantCo.

Out of USD 25.6 million of equity tranche, Bayfront, as sponsor of the transaction acquired the Retention Preference Shares (equivalent to 20.6 million Preference Shares, comprising 5.0 percent of the capital structure) prior to the issue date and to retain them throughout the life of the transaction. The UK Foreign Commonwealth & Development Office (FCDO), as part of its Mobilising Institutional Capital Through Listed Product Structures (MOBILIST) programme, was allocated the balance USD 5.0 million (equivalent to 5.0 million preference shares).  In March 2022, MOBILIST and Singapore Exchange (SGX) Group signed a partnership agreement to mobilise public capital markets for sustainable finance in Asia.

The issuance saw demand from a variety of investors including insurance companies, pension funds, bank treasuries, sovereign and supranational agencies, private banks, asset managers and corporates. The AIIB also participated in the transaction as an anchor investor.

Citi and Standard Chartered Bank are the Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers, as well as ING, OCBC, Société Générale and SMBC Nikko as Joint Bookrunners and Joint Lead Managers.

Nicholas Tan, Chief Executive Officer of Bayfront, said:

“The BIC IV issuance reinforced Bayfront’s unparalleled track record and leadership in delivering high quality IABS transactions to the market. We are very proud to attract new partners in the UK FCDO and GuarantCo / PIDG to help enhance the IABS programme, working with us to deliver innovative structures to catalyse incremental institutional participation. We are also very grateful for the continued support of the AIIB and our bank partners, who are instrumental in our ability to deliver the IABS product on a consistent basis.”

Layth Al-Falaki, Chief Executive Officer of GuarantCo, said:

“We are delighted to have closed our inaugural transaction with Bayfront. This is the first time that GuarantCo has provided a guarantee to an international asset backed securitisation structure and we were given confidence by Bayfront’s strong track record from previous issuances and their expertise in providing opportunities for investors to access infrastructure debt in Asia-Pacific. We are pleased to have guaranteed an investment by global asset manager of the repute of Apollo which has subscribed to the entire Class D tranche. The transaction also presents a sustainable solution to support the building of green and social assets in the region. Our involvement in this novel asset class further strengthens our strategic ambition to mobilise private sector institutional capital, help develop secondary markets for such products and to continue to bridge the infrastructure financing gap to the benefit of local capital markets and the local people.”

Matthew Michelini, Head of Asia Pacific of Apollo Global Management, said:

“We are excited to work with GuarantCo in its inaugural engagement with Bayfront, to be a capital solutions provider for Infrastructure financing needs in emerging markets.”

NOTES TO EDITORS

About Bayfront Infrastructure Management

Bayfront Infrastructure Management is a Singapore-based platform with a mandate to invest in and distribute project and infrastructure loans in Asia Pacific and Middle East regions.
Bayfront previously structured and placed three transactions – Bayfront Infrastructure Capital (BIC) in July 2018, Bayfront Infrastructure Capital II (BIC II) in June 2021, and Bayfront Infrastructure Capital III (BIC III) in September 2022.

 

It was established in 2019 in connection with the Infrastructure Take-Out Facility initiative sponsored by the Government of Singapore, which was designed for institutional investors to access Asia Pacific infrastructure debt. It seeks to address the infrastructure financing gap in the Asia-Pacific region by facilitating the mobilisation of private institutional capital into the infrastructure financing market.

 

Bayfront’s business model is to acquire infrastructure debt, as well as structure, execute and manage securitisations (through its Infrastructure Asset Backed Securities product) or other forms of distribution to institutional investors.

 

Bayfront is capitalised at USD 1.98 billion, comprising USD 180 million in equity and USD 1.8 billion in debt issuance capacity. The equity capital is committed by Clifford Capital Holdings and the Asian Infrastructure Investment Bank on a 70/30 basis respectively. Debt instruments issued by Bayfront to acquire and warehouse loans from banks benefits from a guarantee provided by the Government of Singapore.

 

About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. Since 2005, GuarantCo has enabling USD 6.2 billion of total investment and USD 5.2 billion of private sector investment, giving 45.2 million people improved access to infrastructure and creating around 229,000 jobs. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development www.guarantco.com

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of pioneering, partnership, safety, inclusivity and urgency.
PIDG offers Technical Assistance for upstream, early-stage activities and concessional capital; its project development arm – which includes InfraCo Africa and InfraCo Asia – invests in early-stage project development and project and corporate equity. PIDG credit solutions include EAIF (the Emerging Africa Infrastructure Fund), one of the first and more successful blended debt fund in low-income markets; GuarantCo, its guarantee arm that provides credit enhancement and local currency solutions to de-risk projects; and a growing portfolio of local credit enhancement facilities, which unlocks domestic institutional capital for infrastructure financing.
Since 2002, PIDG has supported 211 infrastructure projects to financial close, which provided an estimated 222 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany and the IFC. www.pidg.org

About Apollo

Apollo is a high-growth, global alternative asset manager. In our asset management business, we seek to provide our clients excess return at every point along the risk-reward spectrum from investment grade to private equity with a focus on three investing strategies: yield, hybrid, and equity. For more than three decades, our investing expertise across our fully integrated platform has served the financial return needs of our clients and provided businesses with innovative capital solutions for growth. Through Athene, our retirement services business, we specialize in helping clients achieve financial security by providing a suite of retirement savings products and acting as a solutions provider to institutions. Our patient, creative, and knowledgeable approach to investing aligns our clients, businesses we invest in, our employees, and the communities we impact, to expand opportunity and achieve positive outcomes. As of June 30, 2023, Apollo had approximately USD 617 billion of assets under management. To learn more, please visit www.apollo.com.