To ensure cost certainty and to meet environmental goals, corporate power purchase agreements (PPAs) have become increasingly common. In 2018, 121 corporates reportedly signed such agreements to buy 13 gigawatts (GW) of electricity directly from power generators (rather than from utilities) for a fixed period and at an agreed price.
Despite their advantages, the rise of corporate PPAs has heightened credit and operational risks for market participants. For the Project Finance International (PFI) 2020 Yearbook, S&P Global Ratings’ senior director, Trevor d’Olier Lees, and associate director, Luisina Berberian, assess why corporate PPAs may not offer credit support comparable to traditional PPAs. However, they conclude that strong corporate demand for these arrangements could provide the impetus to finding appropriate mitigants.
Berberian and d’Olier Lees write: “The renewables sector has often overcome teething problems – with market participants finding innovative ways to finance structures and to mitigate any resultant risks.”
You can access PFI’s 2020 Yearbook here. S&P Global Ratings’ contribution is available on page 40 or via this link.
Green bonds have proliferated since the first green debt instrument was introduced in 2007, with banks and corporate bond issuers leading the pack. However, project bond and emerging market issuers have been more hesitant.
Speaking on TXF Proximo’s podcast, “Transmissions”, Michael Wilkins, Global Head of Analytics and Research, Sustainable Finance, S&P Global Ratings, argues that this may not be the case for much longer.
“Because there is interest among investors to benchmark according to environmental contribution as well as credit quality, there may be opportunity for green project bonds in emerging markets to grow,” said Wilkins.
Meanwhile, he believes that green project bonds may well see a surge in market interest if the high level of environmental contribution that S&P Global Ratings generally sees from the asset class is made explicit in offering circulars.
To listen to the podcast, please click here.
S&P Global Ratings recently announced Pablo Lutereau as its new Head of Infrastructure and Project Finance in the Europe, Middle East, and Africa (EMEA) region.
Following the news of his appointment, Mr. Lutereau said, “Infrastructure plays a critical role in EMEA’s economic growth and development in terms of social well-being. As such, I’m very pleased to start the next chapter of my S&P Global Ratings career within the dedicated EMEA team and look forward to building upon our 25-year history of assessing transactions in this market.”
Lutereau moves from S&P Global Ratings’ Buenos Aires office, where he was Head of Infrastructure & Utilities in Latin America. He will start his new role in January 2020 and will be based in Madrid.
Following Moorgate’s outreach, the news was covered by TXF, IJGlobal, PFI, Proximo and Partnerships Bulletin.
Writing for The Asset, Commerzbank’s Agnes Vargas and Hans Krohn assess the opportunities that the Belt and Road Initiative (BRI) may bring for Europe’s small- and medium-sized enterprises, and how they can engage with the project.
While the “first phase” of the BRI – the construction of large-scale infrastructure – largely excludes SMEs across Central Europe, it is the “second phase” – financing and trade opportunities along these revived trading corridors – for which international financial institutions should be preparing.
Given the enormity and volume of the infrastructure projects defining the first phase, it is likely to be some years until these projects will link to enable the second phase’s transcontinental trade flow. So for the time being, European SMEs should treat the BRI as a lesson in patience. In the meantime, advise Vargas and Krohn, financial institutions should take advantage of the time they have to prepare.
To read the full article, please click here (requires subscription).
Natixis acted as Sole Structuring Bank and Sole Arranger for the first issue of asset backed securities (ABS) backed by a portfolio of renewable energy plants (REBS) sponsored by Glennmont Partners, for a total amount of EUR 51.5 million (USD 58m).
The proceeds of the issue have been applied to acquire a portfolio of project finance loan agreements disbursed to finance or refinance the construction of eight wind farms totalling 52 MW and six solar photovoltaic (PV) plants with a combined capacity of 14.4 MW.
The news was covered by reNEWS, Energy Rev, Renewables Now, PFI, Private Equity Wire, TXF, MfDowJones, Citywire, Investire, Energia & Mercato, Il Sole 24 Ore, Il Messaggero, Il Giornale.
Despite global trade facing a multitude of challenges, including U.S.-China trade tensions and increasing protectionist policies, Asian trade remains robust. Writing for The Asian Banker, BNY Mellon’s Arnon Goldstein and Joon Kim discuss the resilience of Asian trade and Asia’s position as not only an anchor, but an engine, for global trade.
According to Goldstein and Kim, as Asia’s import and export markets strengthen and countries such as Vietnam pick up the baton from China as key low-end manufacturers, while China moves to a more consumer-driven economy, Asian trade is well positioned to continue flourishing.
To read the full article, please click here.
S&P Global Ratings has published 2019’s first edition of Infrastructure Finance Outlook, its newsletter of key infrastructure and project finance-related research and ratings news.
In this edition, S&P Global Ratings considers global infrastructure investment trends, spanning China, the GCC and the Americas, along with the regulatory and political risk factors across these regions.
With global political uncertainties on the rise, infrastructure investors are even more focused on long-term sustainability. And, as environmental, social, and governance (ESG) considerations are rising to the fore of investment strategies, the credit rating agency dedicates this edition to providing greater insight to its newest offering, the ESG Evaluation.
Please see the full newsletter in PDF here.
Natixis acted as mandated arranger, sole coordinator, bookrunner and sustainable development coordinator for the issuance of a €100 million loan by French power producer Voltalia – the first green and sustainable syndicated loan for a European independent power producer.
“By supporting Voltalia in this new operation, Natixis confirms its long-term commitment with this client, and its determination to deliver innovative solutions underpinned by its strategic commitment to green and sustainable finance based on three pillars: innovation, service and integrity” said Marc Vincent, Global Head of Corporate & Investment Banking and Member of the Senior Management Committee, Natixis.
Following outreach by Moorgate, the news was covered by the following specialist publications: Environmental Finance, FinanzNarichten, DGAP, Renewables Now, Bloomberg, La Mia Finanza, Il Sole 24 Ore, PV Magazine, IJGlobal, TXF, Solarnews and EticaNews.
Natixis has teamed up with Groupama Gan Vie, a subsidiary of the Groupama Group, to launch the first green structured note that is entirely supportive of the energy transition. The move reflects both groups’ proactive approach to the fight against climate change.
The product offers a means to directly finance renewable energy projects in order to ensure more environmentally-respectful energy production. The funds collected will be invested exclusively in wind, solar, hydraulic and biomass projects that respect responsible management criteria. The structured not will be issued by Natixis and launched on 1 May.
Elie Bitton, Head of EMEA Sales and Global Head of Financial Engineering, Natixis Global Markets, said: “We are proud today to be able to offer an investment solution that is 100% committed to the climate, and we thank Groupama for its trust and confidence in this high-profile operation.”
Following outreach from Moorgate, news of the launch was covered by El Asesor Financiero, Noticias Canarias, Structured Retail Products, International Advisor, Compelo and Investment Europe.
What key trends do infrastructure investors face in 2019? For one, nationalist and populist movements are on the rise – creating an environment of heightened political risk, which investors may find hard to navigate. The result could weigh heavily on regulatory stability, as well as country risk or sovereign credit quality.
In tandem, environmental, social, and governance (ESG) matters are beginning to rise in prominence. Increasingly, investors are stepping up their focus in their investment mandates on companies that are seen as acting more sustainably.
Against this backdrop, the latest edition of Outlook keeps investors abreast of the most-read research from the past quarter – offering insights into how the Infrastructure segment is changing and, importantly, how it may yet evolve.
Outlook is available in PDF here
Moorgate compiles, edits and designs Infrastructure Finance Outlook.