Standard Bank CEO, Corporate and Investment Banking Luvuyo Masinda says the success of their latest sustainability linked loan highlighted the international syndicated loan market’s continued confidence in Standard Bank and its Africa growth strategy.
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Standard Bank of South Africa, the largest bank in Africa by assets, has closed a well oversubscribed $800 million (about R13.1 billion) sustainability-linked syndicated loan, the largest sustainability-linked loan by an African borrower in 2023 to date.
The facility was coordinated by Bank of America Europe (BofA), Industrial and Commercial Bank of China, London Branch (ICBC), and Standard Chartered Bank (SCB), with BofA and SCB acting as joint sustainability coordinators, a statement from the bank said Thursday.
Initially launched at $500m, the facility was significantly oversubscribed, with commitments totalling over $1 billion. The syndicate comprises a diversified group of investors from across the globe—30 banks from North America, Europe, the Middle East, Asia, and Australia committed to the transaction.
The interest rate on the loan is linked to Standard Bank’s performance against two sustainability key performance indicators (KPIs). The KPIs align with Standard Bank’s sustainability strategy and relate to green finance and social finance mobilisation. The facility is structured as a two-year loan, with an option for Standard Bank to elect to extend for a further year.
Standard Bank CEO for Corporate and Investment Banking, Luvuyo Masinda, said that the success of the transaction highlighted the international syndicated loan market’s continued confidence in Standard Bank and its Africa growth strategy.
This was reflected in the bank’s purpose statement: ‘Africa is our home, we drive her growth,’ he said.
At a Capital Markets Day last month, the bank announced a headline earnings growth target of 8% to 12% per year for the next three years, revenue growth of 7% to 10%, cost to income growth sustainably below 50%, the credit loss ratio within a target range of 70 to 100 basis points, and a dividend payout ratio of between 45% and 60%.
The bank believes four structural market themes will underpin these performance targets: Africa’s favourable demographics, rapidly growing cities and greater investment activity; Africa’s ongoing infrastructure requirements; the expansion of intra-Africa and global trade; and the ongoing rapid evolution of Africa’s financial services landscape.
Standard Bank Group’s share price was unchanged at R321.47 early Thursday morning on the JSE, but the price has appreciated sturdily by 43.3% over a 12-month period.
A sustainability-linked loan is a credit facility where the interest rate or other financial terms are tied to the borrowers achieve of specific sustainability targets. Unlike green loans, which require proceeds to be used for defined environmental projects, sustainability linked loans allow general corporate use of funds, against agreed sustainability metrics.
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