OECD High-level Seminar on Quality Infrastructure Investment Session 4-thomas-bayfront-premond-seminar-oecd

1. CONFIDENTIAL – Information may not be further distributed in whole or in part for any
purpose
OECD Seminar on
Quality Infrastructure Investment
15-16 December 2020

2. A platform designed for institutional investors to access Asia and Middle East infrastructure
debt and for project finance banks to recycle their balance sheets.
 Singapore based platform with a mandate
to invest in and distribute infrastructure
debt in Asia and Middle East
 Established in 2019 in connection with the
Infrastructure Take-Out Facility initiative
sponsored by the Government of
Singapore
 Bayfront intends to be a frequent issuer of
Infrastructure Asset Backed Securities
(“IABS”)
2
CONFIDENTIAL
Information may not be further distributed in whole or in part for any purpose
Introduction to Bayfront Infrastructure
Our Shareholders
Platform Overview Key Highlights
70% 30%
Strategic partnership between Clifford Capital Holdings
(whose shareholders include Temasek and Asian Development
Bank) and the Asian Infrastructure Investment Bank
Seeks to address the large infrastructure financing gap in
Asia and the Middle East by mobilising institutional capital
for project and infrastructure debt through IABS
Builds on the successful issue of Bayfront Infrastructure Capital
(BIC) in 2018, Asia’s first securitisation of Infrastructure
Debt, launching IABS as a new asset class in the region
Sponsorship by the Government of Singapore and the
Monetary Authority of Singapore
Strong balance sheet of ~US$2bn to support asset
acquisitions and distributions

3. Bayfront’s business model is to acquire and warehouse infrastructure debt, as well as
structure, execute and manage securitisations or other forms of distribution to
institutional investors.
 Bayfront’s Take-Out Eligibility
Framework governs the criteria
for loan take-outs. The
Framework includes:
1. Loan selection criteria
2. Due diligence parameters
3. Take-out commitment
mechanism
4. Acceptance tests
 MOUs in relation to the
Take-Out Eligibility Framework
with contributing banks
 Designed to encourage banks to
increase origination appetite given
increased confidence of take-out
 Bayfront to acquire loans from
banks and hold them on its
balance sheet while building a
portfolio of loans for distribution,
thus enabling Bayfront to:
1. Provide certainty to banks
that the loans would be taken
out;
2. Accumulate sufficient volume
of loans;
3. Identify the optimal market
timing to launch a distribution
transaction; and
4. Hold the loans in the event
of adverse market
conditions
 Distribution platforms would be
established to act as entities
issuing securities to
institutional investors
 Executed a successful pilot
transaction through Bayfront
Infrastructure Capital in July
2018
 Other distribution formats (in
addition to securitisations) can also
be considered
 Bayfront will also invest in the
equity tranches of these
issuances to demonstrate
alignment of interest with
investors.
CONFIDENTIAL
Information may not be further distributed in whole or in part for any purpose 3
Eligibility Framework Warehousing Facility Distribution Platforms
Our Business Model

4. Infrastructure ABS (IABS)
Attractive & Innovative Credit Enhanced Debt Securities
CONFIDENTIAL
Information may not be further distributed in whole or in part for any purpose 4
 Structured notes backed by a diversified portfolio of high quality, senior ranking infrastructure loans
 Spectrum of investment grade securities across a range of ratings, tenor and returns
 Investor friendly structural protections, including “first loss” risk retention by Bayfront
 Regular monitoring of Performance Tests (Over-collateralisation, interest coverage, limited asset substitution)
 Dedicated portfolio management with specialised domain knowledge
What is IABS?
 There are limited investment grade / rated
opportunities in emerging markets
 Building a diversified portfolio is a challenge
without a large capital allocation
 Significant resource requirements for credit
analysis and portfolio management
 Limited liquidity in secondary loan market for
infrastructure loans
 Need to underwrite direct credit risk exposure for
individual bespoke loans
Key Barriers to Entry Faced by Institutional
Investors into Infrastructure Debt How Can IABS Address These Challenges?
Access Asia Pacific and Middle East infrastructure
debt through investment grade rated notes
Offers diversified exposure to multiple loans /
projects in a ‘bite-sized’ manner
Access to loans from Bayfront’s large network of
20+ contributing banks
Greater liquidity than loans given bond format
issuance and smaller minimum investment
Additional layer of credit enhancement through first
loss risk retention and subordination

5.  The execution of the MOUs is meant to align the understanding between each bank and Bayfront for future
collaboration on the take-out mechanism for infrastructure debt, including the key principles and criteria for
potential transfers of infrastructure debt from each bank to Bayfront
 Bayfront has acquired or agreed with over half of the MOU banks on asset acquisitions.
Bayfront has executed Memoranda of Understanding (“MOUs”) with 21 banks to date in
relation to its Take-Out Eligibility Framework.
CONFIDENTIAL
Information may not be further distributed in whole or in part for any purpose 5
Bank Partnerships
European and American Banks Asia Pacific Banks

6. Pilot Transaction – Bayfront Infrastructure Capital (2018)
The BIC transaction took place in July 2018, and was executed as a pilot programme to act
as proof of concept for the envisaged Bayfront business.
Sponsor, Manager
and Investor
Clifford Capital
Issuer Bayfront Infrastructure Capital Pte. Ltd.
Issuance
(US$m)
Total Size: 458.0
– Class A (Aaa-rated): 320.6
– Class B (Aa3-rated1): 72.6
– Class C (Baa3-rated1): 19.0
– Sub Note (Unrated): 45.8
Listing Singapore Exchange (SGX)
First of its kind. First ever securitisation of infrastructure
finance loans out of Asia; Led the development of
institutional capital markets for infrastructure
High quality investor base. Catalysed investments by 16
investors, spread across insurance, pension / endowment
funds, bank treasuries, asset managers and family office /
private banks
Unique investment opportunity. Unique access to a
diverse, seasoned portfolio of 37 loans against 30 marquee
projects in Asia and the Middle East through investment
grade rated and listed securities
Alignment of interest. Clifford Capital is the investor inthe
Sub Notes (first loss position), demonstrating alignment of
interest with investors
Well received by the market. BIC was recognised in
2018/2019 by leading financial publications for a number of
awards
1
Transaction Summary Key Transaction Highlights
2
3
2019
2018
2018
 Most Innovative Deal of
the Year (Regional)
 Most Innovative Deal of
the Year (Singapore) 2019
2018
2018
 Structured Finance &
Securitisation Deal of the
Year
 Best Cross Border
Securitisation
 Asia PacificRefinancing
Deal of the Year
 Best Structured Finance
Issue
 Asia Pacific Bond of the
Year
 Best Project Finance Deal
 Best Structured Finance Deal
 Best Bond Deal
2018
4 Specialist sponsor. Enable investors to leverage on Clifford
Capital’s domain knowledge as a project financespecialist
5
6
CONFIDENTIAL
Information may not be further distributed in whole or in part for any purpose 6
1 Ratings for Class B and C Notes were upgraded by Moody’s to Aa2 and Baa2 respectively on 21 August 2019

7. Bayfront Infrastructure Capital
Marketing and Allocations
CONFIDENTIAL
Information may not be further distributed in whole or in part for any purpose 7
Marketing & Allocation Overview Key Transaction Statistics
 Orderbook size: >US$750m
 Number of accounts: c. 25 (16 allocated)
 Extensive investor pre-marketing was
conducted across APAC (Singapore,
Hong Kong, Japan, Korea, Philippines,
Australia & New Zealand), Europe and
the Middle East
 The transaction announced on July
17th with indication of interest (“IOI”)
oversubscription for each of the classes
 Through comprehensive and strategic
marketing process, the IOI-to-final
order conversion rate was high
 Until pricing on July 25th, orders
totalled over US$750mm from ~25
different investors, featuring notable
sponsorship from high quality
institutional buyer base not typically
active in the structured financing /
project & infrastructure finance space
 Class A was 2.0x oversubscribed, Class
B 1.1x and Class C 1.4x
Singapore
26%
Europe
22%
North Asia
16%
Rest of
Southeast
Asia
16%
Middle
East
12%
Oceania
7%
US
1%
Investor Breakdown
By Geography
Bank
Treasury
33%
Insurance
22%
Asset
Managers
21%
Pension /
Endowment
17%
Family
Office /
Private
Banks
7%
Investor Breakdown
By Type

8. Bayfront Infrastructure Capital
Learning Points
CONFIDENTIAL
Information may not be further distributed in whole or in part for any purpose 8
Transferability /
Consents
1
Eligible Loan Pool
2
Disclosure
3
Platform / Timing
4
Investor Mandates
5
Issues Learning Points
 Difficulty in obtaining borrower / ECA / MFI /
consent for loan transfers
 Engage ECAs and MFIs on the transfer
restrictions
 Work towards standard clauses to facilitate loan
transfers
 Difficulty in sharing granular loan level information
with investors due to confidentiality agreements
or sub-participation restrictions
 Focus on direct assignment to the extent possible
and work with ECAs and MFIs to permit such
transfers
 Need for diversified loan portfolio across
geographies, sectors, sponsors, contractors,
offtakers etc.
 Engage wider community of banks to participate
 Expand loan portfolio to potential new countries or
regions
 Simultaneous transfer of loan portfolio and CLO
issuance meant that contributing banks were
required to hold on to their assets for a long
period of time to allow for due diligence, ratings
analysis and a suitable market window
 Necessitates creation of a permanent
warehousing facility to act as an intermediary
between take-out from banks and distribution to
capital markets
 Longer time taken to get investor buy-in due to
lack of familiarity
 Limited participation from US-based investors
who are generally structured finance specialists
 Need for regular issuances to build investor
familiarity
 Broaden investor outreach, including potentially to
144a market
Pricing Dynamics
 There exists a significant gap between loan
pricing in the bank market and yield expectations
in the capital markets
 Possibility of getting pricing expectations down for
the notes in the investor community in repeat
issuances
 Working on acquiring better yielding assets from
banks via discussion on pricing once the flow of
assets accelerates
6

9. THANK YOU
For more details, please visit our website at
https://www.bayfront.sg/