Singapore companies are now ready to file for large cross-border projects which need heavy financing. This based on the latest initiative by the Singapore Government for introducing a specialized project finance company (PFC). Analysts and market players praised the move - which had been unveiled in the Singapore Budget - said that this would expand the opportunities of local companies in international markets. The government also said that it would give a guarantee on the debt instruments which had been issued by the PFC.

The PFC would be formed by a consortium headed by Temasek Holdings and would include DBS Bank, Sumitomo Mitsui Banking Corp and Standard Chartered Bank. The PFC would operate for filling the funding gap for Singapore companies. It would operate like government-backed export-import banks and export credit agencies that were currently available in other countries. Some S$400 million of financing would be given to qualifying projects annually.

Philippe Touati as head of origination and client coverage at Standard Chartered Bank had said that it would enable companies decrease some of the risks they would face when they wanted to venture overseas, to decrease some of the country risk issues, some of the liquidity issues they would face if they wanted to execute some projects in places which were not as straightforward as Singapore.

Experts said that project financing would be targeted at medium- to large-sized projects worth over US$500 million and had longer completion periods. Mr Touati added that typically, areas which need longer tenor financing and bigger quantum such as water treatment or offshore marine and infrastructure, are good candidates for project financing.

Comments are closed.