Green Bonds From Terraform Global, SolarCity, and Hannon Armstrong

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by the Climate Bonds Team

Yieldco TerraForm Global (GLBL) issues a whopping $810m green bond (7 years, 9.75%, B2/B+)

TerraForm Global Operating has issued an $810m green bond, with 7-year tenor, 9.75% coupon and ratings of B2 and B+ from Moodys and S&P respectively. TerraForm Global is a recent yieldco spin off (IPO last month) of SunEdison (SUNE) group (have a look here if the yieldco concept is new to you).

Terraform Global owns and operates renewable energy assets – solar, wind and hydro – in emerging markets, in the following locations:

  • Solar: China, India, South Africa, Honduras, Uruguay, Malaysia and Thailand.
  • Hydro: 6 projects in Peru (for 336MW aggregate capacity), as well as 3 small operational hydro projects in Brazil (aggregate capacity of 42MW).
  • Wind projects: China, Brazil, South Africa, India, Honduras, Costa Rica and Nicaragua.

The emerging market focus sets Terraform Global apart from its sister-yieldco Terraform Power Operating, which has so far issued 3 bonds for a total of $1.25bn, but who only has one emerging market project, in Chile. Their renewable energy power plants are predominately in the US, with some assets in Canada and UK.

Terraform is really showing the potential for yieldcos to issue green bonds to finance renewable energy in a wide range of countries – way to go!

SolarCity (SCTY), the US largest solar developer, comes to the green bond market yet again with $123.5m of solar asset-backed securities. The 7-year tenor green ABS is split across two different ranking tranches; the larger $103m senior A-rated tranche has a 4.18% coupon and the smaller $20m junior tranche, rated BBB, with a 5.58% coupon. Great to see solar-backed ABS moving up the credit ratings!

SolarCity has been a pioneering company in the solar securitisation space; in November 2013, they were the first corporate to issue a fully solar-backed ABS, and several more deals followed in 2014.

This latest deal from SolarCity adds to other recent green ABS deals, with July seeing green ABS issuances from both RenewFund and Toyota.

Hannon Armstrong (HASI) announced it will issue another round of green asset-backed securities (it calls them Sustainable Yield Bonds), this time for $125m and 25-year tenor. As its previous issuances of green asset-backed securities, they will be backed by renewable energy and energy efficiency assets. The ABS offering will be offered by an indirect subsidiary of Hannon Armstrong.

The Climate Bonds Team includes Sean Kidney, Tess Olsen-Rong, Beate Sonerud, and Justine Leigh-Bell. 
 The Climate Bonds Initiative is an “investor-focused” not-for-profit promoting long-term debt models to fund a rapid, global transition to a low-carbon economy. 

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