Income Investments

by Sean Kidney Trina’s $150m 3.5% 5yr convertible solar bond In June Chinese solar manufacturer Trina announced the private placement of $150m of 5 year, 3.5% convertible bonds to “institutional investors” (no details provided). Trina weren’t clear how they would use the proceeds, but they are planning to build 400-500MW of solar plants over the rest of this year. Book-runners were Deutsche Bank, Barclays, J.P. Morgan and Goldman Sachs (Asia), with co-manager HSBC. SunPower issues $400m 7yr 0.875% (!) convertible solar bond That same month SunPower announced a private placement of $400 million, 7 year, 0.875% senior convertible bonds. What...

Tom Konrad, CFA A solar project at Fort Hunter Liggett in California. Photo: US Army Corps of Engineers Power REIT (NYSE:PW) announced yesterday that it had closed on a deal to buy approximately 100 acres of land leased to the owners of over 20 MW of solar projects near Fresno, CA.  This will be the company’s second solar transaction and increases the share of its revenue from solar to 21%.  These two solar transactions put PW well on its way to becoming the nation’s first REIT...

by Sean Kidney   Earlier this month CitiBank (NYSE:C) and Bank of America Merrill Lynch (BoAML; NYSE:BAC) launched, via a special EuroWeek report on ‘sustainable’ capital markets, a “Framework for Green Bonds“. This is potentially a big development. In the paper the two banks laid out a ‘vision’ for the green bonds market and called for a Green Bonds Working Group of issuers, dealers and investors to be formed to drive the evolution of the nascent market. The paper calls for debate about the green bond market, especially about...

by James Montgomery 2014 is predicted to be a breakout year for solar financing, as the industry eagerly pursues finance innovations. Many of these methods aren't really new to other industries, but they are potentially game-changing when applied in the solar industry.

by Sean Kidney Renewable Energy Finance via BigStockPhoto There has been a bit of interest recently about rapidly expanding options for retail investors to get involved in renewable energy projects. While we still see retail bonds as making a relatively modest contribution to the transition to a low carbon economy, they are important in engaging the public and creating awareness for green thematic investments which can only be good. Here’s a round up of some of the activity going on in the retail bond market (please note, this...

Tom Konrad CFA The silver lining of all market declines is the chance to buy stock in quality companies at attractive prices.  That opportunity has been notably absent over the last two years, which is why my focus has shifted to smaller and smaller companies in search of reasonable valuations over that time.  Although I still don't believe the market is cheap by any measure other than comparing it to a couple months ago, the volatility is starting to bring some individual bargains, especially on heavy selling days.  For instance, I've started to acquire some of...

Tom Konrad CFA Compared to the peak of the Yieldco bubble in May, many Yieldcos have dropped by more than half, and most by more than a third. Some of this decline is because rapid dividend growth depends on an endless supply of cheap investor capital which is another way of saying that we can have rapid dividend growth or high dividend yields, but not both.  Part of the decline was due to the realization that many Yeildcos (most notably Terraform Power (TERP), Terraform Global (GLBL), and Abengoa Yield (ABY)) were not immune to...

Tom Konrad CFA Conserving the planet for conservative investors. Investing in clean energy stocks has an (often well-deserved) reputation for risk.  Although energy efficiency and more inclusive progressive energy indexes have held up fairly well over the last few years, the performance of narrower clean energy sectors has been dismal, and some industry observers feel that the declines in wind and solar are structural (and hence permanent) as opposed to cyclical (and therefor temporary.) This presents a conundrum for investors with long time horizons who not only need their investments to earn a steady return...

Tom Konrad CFA Dumpster diving for high yielding gems. An earlier version of this article was written at the end of July and published on my Forbes blog, before the August market implosion. I've updated it here to reflect the new stock prices and some recent company news. Renewable energy has many advantages over fossil energy.  One of the most important is that it's renewable.  As supplies of Oil and other fossil fuels are used up, they become harder and more expensive to extract, while renewable energy is generally getting cheaper over time,...

Bridget Boulle It’s been another ground breaking quarter for green bonds – the biggest yet with just under USD9bn issued ($8.997bn). It seems our initial estimate of $20bn for the year will be met much sooner than we thought so we’ve revised it to $40bn (there are no rules). There have been new issuers, new currencies, new underwriters, new areas of issuance and, for the first time, a green bonds index. All good things, here is a summary… The development banks led the way for the quarter but not by too much: development banks = USD4.9bn while corporates =...

By Bridget Boulle and Sean Kidney Helping to push along the green muni space, the New York State Environmental Facilities Corp (EFC), rated AAA, has issued a USD 213 million green / water bond. There were 30 bookrunners on this bond with JP Morgan and LOOP Capital Partners co-leads - see prospectus. The proceeds will be used to provide financial assistance to local governments to finance and refinance drinking water projects as well as to refund certain bonds previously issued. They expect to support 128 drinking water and wastewater infrastructure projects across the State. Qualifying projects...

by Debra Fiakas CFA This week Pattern Energy Group’s (PEGI:  Nasdaq), the independent wind power generator, is scheduled to report sales and earnings for the quarter ending September 2015.  The company has cultivated a strong following among analysts for a company its size.  Nine estimate contributions have gone into a consensus estimate of $87.2 million in sales for the quarter, resulting in a net loss of a penny per share.  If achieved the sales hurdle would represent 22% growth over the same quarter last year.  A penny loss may not seem impressive, but it is substantially better than...

Jennifer Runyon According to Richard Kauffman, Senior Advisor to the Secretary, DOE, making REITs or MLPs available for renewable energy project financing is the key to advancing the industry.   Top engineering, procurement and construction firms gathered to network, learn and do business with corporate-level project developers at the PGI Financial Forum, one of four co-located events that took place in Orlando, Fla. earlier this month. Richard Kauffman, Senior Advisor to the Secretary of the U.S. Department of Energy, gave the keynote address during a luncheon that took place during the conference. ...

Sean Kidney Toyota Motor Corp. (NYSE:TM) will close mid-next week on what will be the world’s first green bond backed by auto loans – electric vehicle and hybrid car loans to be specific. And what a kickstart for that market, at $1.75 billion. According to a report in International Financing Review (IFR), the bond will be in multiple tranches, each at a different ratings level: A2 tranche, A3 and A4 (Moody’s ratings). First thing to know: they told the media a week ago it would be a US$774.675 million bond. Rumour has it that initial investor interest...

New Canadian Climate bond: Northland Power releases a pretty big ABS - CA$232m (US$206m) - backed by solar projects with proceeds for renewables. 18-year tenor, 4.397% coupon, BBB. Securitisation key future area for green bonds.