PT SMI is a state-owned company engaged in infrastructure project financing in Indonesia. MayCap advised the Asian Development Bank (ADB) and PT SMI in the development and structuring of a Partial Credit Guarantee (PCG) product, its applicability to the Indonesian infrastructure sector and how PT SMI could leverage its balance sheet, credit rating and government mandate to enable development of new innovative financing sources to finance infrastructure in Indonesia.

Abhay Ketkar and Pankaj Nehra carried out the following activities:

• Detailed diagnostic exercise to determine the applicability and value-addition of credit-enhancement products, specifically PCGs in the Indonesian market from the perspective of existing lenders, borrowers (project SPVs) and sponsors
• Guidance, through detailed consultation with market participants, on market perception of PCG in terms of: (i) liquidity of the capital markets; (ii) appetite of institutional investors for investing in credit-enhanced bonds; and (iii) capacity of rating agencies to support PCG products
• Provided detailed implementation requirements to PT SMI on (i) eligibility criteria for projects seeking to revise their liability structures through the PCG scheme; and (ii) risk management criteria required by PT SMI, in line with global standards
• Guidance and implementation requirements to PT SMI on internal controls and risk management tools required to standardize PCG in the local market
• Structuring inputs and expertise to PT SMI for shadow, pilot and actual transactions. Developed financial model for a sample toll-road project and pricing of PCG
• Implementation expertise on loan and bond documentation required to support PCGs;
• Developed a fee pricing mechanism, structuring market-sounding, project identification, risk assessment and benchmarking the product with similar institutions in Asia and globally
• The product was developed for infrastructure projects financed under public-private partnerships (PPPs) / project finance (PFI) / corporate finance schemes
• Conducted a workshop to present proposed product structures to key stakeholders.

For further information, contact Abhay Ketkar at abhay.ketkar@maycapadvisors.com.

https://ptsmi.co.id