OCBC extends US$70m sustainability-linked loan to Taiwanese bulk carrier U-Ming

OCBC has extended a US$70 million sustainability-linked loan with U-Ming Marine Transport Corporation, one of Taiwan's largest listed bulk carrier companies.

The loan will be used to fund U-Ming's fleet renewal plan, which includes the construction of 2 new 210,000 deadweight tonnage (dwt) bulk carriers, U-Ming announced on Wednesday (Feb 9).

This is the first sustainability-linked loan that OCBC is extending to a Taiwanese company, and U-Ming's first loan outside of Taiwan. It is pegged to pre-agreed targets, and U-Ming will enjoy interest rate reductions if it meets these targets in 2 areas.

First, U-Ming must reduce its emission intensity - this will be measured in terms of U-Ming's fleet annual efficiency ratio. This target is set in line with the International Maritime Organisation's (IMO) targets to reduce carbon intensity of international shipping by at least 40 per cent by 2030 and 70 per cent by 2050, as compared to 2008.

Secondly, a larger proportion of U-Ming's fleet each year must obtain a satisfactory emissions rating from RightShip, a third-party maritime due dilligence organisation.

The vessels are due for delivery in the last quarter of 2022. Fuel consumption by the vessels will be greatly reduced with an optimised hull design, U-Ming said. They will also be installed with a specifically-designed fleet safety management system.

In a media statement on Wednesday, U-Ming president Ong C K said the loan demonstrates his company's long-term commitment to transforming its vessels into an environmentally-friendly fleet that complies fully with the IMO's carbon reduction targets.

OCBC's head of global corporate banking Elaine Lam noted that the decarbonistion of shipping has gained momentum. "This sustainability-linked loan with U-Ming is pegged to clear emissions targets that will help realise this vision, and it demonstrates OCBC's commitment as a signatory to the Poseidon Principles," Lam said, referring to the global framework for integrating climate considerations into financial institutions' shipping portfolios.