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AIIB opens Myanmar book amid falling FDI

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he Asian Infrastructure Investment Bank (AIIB) has issued its first loan in Myanmar. It will lend US$20mn to the Myingyan gas-fired power plant, which will also receive US$58mn from the International Finance Corporation (IFC) and potentially US$42.2mn from the Asian Development Bank (ADB). The 230MW plant will be constructed by Singapore’s Sembcorp Industries, who won what is considered to be the first wholly international tendering process in the country’s sector. Development banks are circling Myanmar, hoping to bolster their investments in a country which has lost much of its sheen for commercial investors over the past 12 months.

A long electoral period which eventually saw the National League for Democracy (NLD) sweep to power earlier this year, coincided with a sharp drop in foreign direct investment (FDI) into Myanmar in 2015. FDI fell from a peak of US$8bn in 2014 to US$3.9bn last year. The NLD, led by Aung San Suu Kyi, is expected to announce a comprehensive economic policy in the coming months, which could serve to assuage investors’ fears, particularly given the US’ surprise decision to lift economic and trade sanctions on Myanmar in September. While things are uncertain, it could well be down to caution rather than longterm reluctance to trade in or with Myanmar, one of Asia’s frontier markets. “I’m still quite positive about Myanmar,” Khaing

Zar Aung, head of insurer Willis’ representative office in Yangon tells GTR. She explains: “I know FDI is down by 85% and that affects our business obviously. With the new government, we thought investment would be rushing in and everyone would be keen to do business in Myanmar. But in reality, because of a lot of changes in regulation, a lot of investors have held back, a lot of projects have been pushed back until industrial policy has been refocused.” Aung adds that many companies appear to be awaiting a codification of economic policy before moving. Insurance premiums are down, she says, but that has meant more people are taking them out. For Willis, volume is up, even if the average premium value is down. Much planned investment

“A lot of investors have held back, a lot of projects have been pushed back until industrial policy has been refocused.” Khaing Zar Aung, Willis

in the construction sector has been put on ice after the government suspended all planned projects with more than nine storeys in Yangon, the largest city and former capital, including those that are in construction. In an explanatory note, the government cites issues such as lack of fire-safety systems, lack of parking space, violations of road-to-building rules and breaches of planning permission approval on height.

Cofco Agri closes bumper syndicate

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ofco Agri has closed a US$2.6bn syndicated credit facility with a host of international banks. The Chinese commodity house, which was formed after Cofco completed the purchase of the agricultural unit of troubled Noble Group earlier this year

for US$750mn, launched the syndication in July in Singapore. The deal was 100% oversubscribed – an indication of the lack of viable deals banks are seeing in the sector. Cofco settled on US$2.6bn, having scaled back lenders’ commitments.

Senior bookrunning mandated lead arrangers (MLAs) were: ABN Amro, Agricultural Bank of China, Bank of China, China Construction Bank, China Development Bank, China Merchants Bank and ICBC. Bookrunning MLAs were: Bank of America

Merrill Lynch, BNP Paribas, Commonwealth Bank of Australia, DBS, First Gulf Bank, National Bank of Abu Dhabi, Rabobank, Société Générale, SMBC, United Overseas Bank and Westpac. MLAs were: BBVA, Crédit Agricole and National Australia Bank.

Fangyuan Group seals large structured commodity loan

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n international syndicate of banks has arranged a US$385mn structured copper pre-delivery loan for Fangyuan Group, the fourth-largest copper producer in China. This was the first offshore syndication raised by the group and it follows a US$145mn facility raised in 2015. The lead arrangers were Deutsche Bank and ING and

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while the terms of the finance are confidential, Frank Wu, the regional head of structured commodity trade finance at Deutsche, says that they “have all the classic elements of a structured commodity trade finance (SCTF) loan, such as ring-fenced self-liquidating cashflow from the underlying commodity offtake”. He continues: “The pricing

is in line with what the market would expect for this kind of counterparty and deal structure. The oversubscription shows that there is good market appetite for good SCTF deals.” This market appetite has returned with the upturn in commodity prices through Q2, Wu tells GTR. The deal was 54% oversubscribed, with Wu also alluding to but not providing

details of another SCTF deal closed recently that was 50% oversubscribed. There were 11 banks involved in the syndication, and GTR can reveal them to be: Deutsche Bank, ING, Société Générale, ABN Amro, China CITIC Bank, First Gulf Bank, Korea Development Bank, Nanyang Commercial Bank, SMBC, ICICI and Banca Monte dei Paschi di Siena.

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November/December 2016 issue  
November/December 2016 issue  
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