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Canadian Solar announces closing of Solar Equity Securitization in Japan

Power News - Published on Fri, 11 Jan 2019

Image Source: Korea IT Times
Canadian Solar Inc one of the world's largest solar power companies announced that it has completed the closing of its first equity securitization in Japan. This transaction is the first equity securitization in the world to be backed by long-term contracted solar assets. Canadian Solar successfully raised JPY 6.3 billion (USD 58 million) from a diversified mix of Japanese and Korean institutional investors in its inaugural offering of equity backed securities, Canadian Solar Securitized Green Equity Trust 1. Proceeds from the offering were originally deployed to acquire Canadian Solar's 34MWp operating solar portfolio, comprising the 23.8MWp Smart Solar Yamaguchi-Aio Solar Power Plant and the 10.2MWp CSJ Kamikitagun Rokunohemachi Solar Power Plant. Canadian Solar recognized revenue from sale of the plants in the third and fourth quarter of 2018.

The two projects have existing debts that have been raised through a non-recourse project bond structure developed using financial securitization techniques. The securitization of the equity portion of the capital structure brings the whole-business securitization concept one step further and culminates into a total securitization of solar assets. The investment period matures in September 2037 and the securities have been rated as Green 1, the highest Environmental, Social and Governance investment tier by the Japan Credit Rating Agency, Ltd. The underlying solar power plants have each further received the investment grade rating of "A" from JCRA for its non-recourse project bonds.

Electricity generation from the CSJ Kamikitagun Rokunohemachi Solar Power Plant and the Smart Solar Yamaguchi Aio Solar Power Plant is purchased by Tohoku Electric Power Co., Inc. and Chugoku Electric Power Company under 20 years feed-in-tariff contracts at the rates of JPY36 (USD 0.33) and JPY40 (USD 0.37) per kWh, respectively. Canadian Solar's asset management arm, Canadian Solar Asset Management KK has been appointed as the Asset Manager to manage the securitized portfolio. Canadian Solar O&M Japan also provides Operations and Maintenance services for the remaining duration of the 20 years FIT period. The two solar power plants utilize MaxPower modules supplied by Canadian Solar and began commercial operations in late 2016.

Goldman Sachs Japan Co Ltd acted as sole structuring agent and sole placement agent for the transaction.

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Posted By : Rabi Wangkhem on Fri, 11 Jan 2019
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