Canada’s Next Era Energy recently issued an asset-backed $175m, 19 year solar bond. Rating BBB, interest rate 4.80%. As Bloomberg pointed out, this was a higher rating than Warren Buffett’s MidAmerican Energy Holdings' Topaz solar bond - because there was no construction risk. Sole Bookrunner was Royal Bank of Canada (RBC).
RBC says this is the first and only investment grade rated solar bond issue in the Canadian bond market. Buyers were apparently from a “broader base of Canadian bond investors than traditional project bond buyers”.
The bond was issued by the company’s St Clair Inc subsidiaries, operating two solar plants with 40MW capacity near Sarnia, Ontario, secured by a 20 year power purchase agreement (PPA) with the Ontario Power Authority. The plants were acquired from FirstSolar last February on completion of construction – so it’s a classic re-financing of a proven asset. We ‘re going to see a lot more of these in coming years.
