Kris Emerton-Jones

Indonesia loan pricing plumbs lows HONG KONG, May 31 (LPC) – Indonesian state-owned borrowers are taking advantage of a dearth of deals and hunger for diversification among lenders to push pricing on loans from South-East Asia’s largest economy to unprecedented low levels. A dozen banks are mandated on a US$1.5bn loan for Mining Industry Indonesia (MIND ID), while Bank Rakyat Indonesia has shortlisted nearly 10 lenders on its US$1bn debut social borrowing. The state-owned miner and lender are venturing offshore for the jumbo loans that carry the tightest pricing for Indonesia for the respective tenors. MIND ID’s five-year loan is expected to pay an interest margin of around 115bp, while BRI’s three-year borrowing is expected to pay around 70bp. “South-East Asian loan activity remains anaemic, and this has resulted in banks writing big-ticket cheques for deals, leading to significant price compression in select deals,” said a Hong Kong-based syndicated loan banker. “Indonesia is one example of that – it is a borrowers’ market.” According to LPC data, the average margin for three-year loans from Indonesian credits was 144bp in 2023 versus 216bp in 2022, while five-year facilities paid 209bp versus 344bp. https://lnkd.in/gKsCueTd #loans #lending #asiapacific #indonesia #bankrakyatindonesia #mindid #syndications #corporatefinance #debtcapitalmarkets #debt #loanpricing #ifr #lpc

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Here follows insights into a modern payment system in Asia with mass consumer adoption and the implications for modernising UK payments. Promptpay, Thailand’s instant payment system, went live in 2016. It processes about two billion instant payments a month and volumes are growing at about 30% per year (see first graph).   That is equivalent to 26 payments per month for every person in Thailand, with an average payment size of 2,140 Baht (£46/$59). In comparison, the UK Faster Payments system processes about 320m immediate payments per month, or about five immediate payments per person per month at average of £712 ($900). The UK population (67m) and Thai population (72m) are comparable in size, but their economies, demographics, commerce and payments infrastructure are very different. Thus, these averages and comparisons are crude, particularly as they mix lower volume, higher value business-to-business payments with person-to-person and retail payments. However, they are useful in understanding the differences in adoption of different payment methods. One major difference is UK payments are dominated by cards, in particular debit cards where volumes are about two billion payments per month, versus about 114m debit card payments per month in Thailand, down from a peak of 201m in December 2019 (see second graph). Promptpay, which connects bank accounts through ewallets outstrips debit card usage in Thailand 20-fold and must be a factor in causing this decline. For example, within two years of Promptpay launching its QR code feature in 2019 to accept payments on a mobile, over two million micro merchants signed up to it - it is reasonable to assume most of these micro merchants would have been unable or unwilling to accept card payments whereas Promptpay has allowed them to accept payments into their bank accounts easily and at very low cost. Promptpay is just one example of how ewallets connected to bank accounts with instant payments are gaining huge consumer adoption. Pix in Brazil which I covered earlier this month is another and there are many more, especially in Asia. Provision of debit card payments is highly competitive in the UK but modern payments systems such as Promptpay highlight how debit cards are being sidelined elsewhere by a better, more user friendly payment method. The UK retail payments market is ripe for renewal and must be wide open to the mass adoption of ewallets – in the face of a slow-to-change banking sector, it needs imagination and drive from entrepreneurs to make it happen. #Payments #Promptpay #ewallets #digitalwallets #debitcards #instantpayments

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