• Published on 19 September 2024
• 787 Views
• Print

SMBC extends 5-year Blue Loan tranche to HUDCO

Sumitomo Mitsui Banking Corporation (SMBC) successfully closed a JPY 64 billion ($440 million) syndicated external commercial borrowing (ECB) with a Blue Loan tranche as part of the facility for Housing and Urban Development Corporation Limited (HUDCO) from its Singapore branch along with two other banks.

SMBC is the mandated lead arranger and bookrunner, joint ESG loan coordinator, agent bank and authorised dealer bank in this landmark transaction. This is HUDCO’s second ECB borrowing from SMBC and its maiden foreign currency Blue Loan transaction.

A portion of the loan would qualify as a Blue Loan since the foreign currency borrowing was utilised for onward disbursement to support the Jal Jeevan Mission in India, an ambitious programme launched by the Government of India with an objective to provide functional household tap connection to every rural household such as the Har Ghar Nal Se Jal by 2024. HUDCO has sanctioned a total financial assistance of INR 70.91 billion ($847.6 million) (INR 40.00 billion ($478.1 million) in phase-I in the year 2022 and INR 30.91 billion ($369.5 million) in phase – II in FY 2024) towards Government of Rajasthan covering various districts in the state.

SMBC worked closely with HUDCO to establish their sustainable financing framework, which is in line with the Green Loan Principles (2023), and Social Loan Principles (2023). These are globally recognised methodologies developed by the Loan Market Association (LMA), Asia Pacific Loan Market Association (APLMA) and Syndications and Trading Association (LSTA), to achieve positive social outcomes for the company and green initiatives outlined by the Reserve Bank of India.

Commenting on the transaction, Hiroyuki Mesaki, country head of SMBC India, stated: “The deal with HUDCO is a testament of SMBC’s credentials globally and further embodies our mission towards investing a cumulative total of JPY50 trillion ($349.9 billion) into sustainability-related financing globally by 2030. This deal will also contribute towards creating a better life for underserved communities.”

Rakesh Garg, chief business officer, SMBC India, added: “We are excited and proud to partner with HUDCO on their second offshore borrowing and maiden Blue Loan transaction, and in their mission to provide better infrastructure including tap water and drinking water facilities while also improving the quality of life for the community.”

Sanjay Kulshreshta, chairman and managing director of HUDCO, said: “With the government's recently approved Pradhan Mantri Awas Yojana 2.0 and focus on infrastructure-led growth, HUDCO anticipates a surge in demand for its services. By actively participating in PMAY 2.0, HUDCO aims to further enhance its impact on mitigating shelter shortages and advancing the country’s housing infrastructure. The substantial increase in infrastructure outlay signals significant growth prospects, aligning with HUDCO's mission to supplement efforts of the Government of India for the creation of sustainable and resilient infrastructure, in line with Viksit Bharat 2047. HUDCO’s collaboration with SMBC and two other Japanese banks has enabled diversification of resource base, established its footprint in international markets through its maiden JPY-denominated ECB offering, and optimised overall costs to add competitive strength to HUDCO’s overall lending operation.”

Re-disseminated by The Asian Banker