NRG Yield Operating LLC yesterday announced it had issued a $500 million bond to finance the purchase of the Alta Wind facility in California. It's 10-year corporate bond with a 5.37% coupon. Alta Wind has 947MW of operating wind capacity. NRG Yield is rated Ba1 by Moody's.
NRG Yield had originally said they would be issuing a $400 million bond, but increased it on the back of investor demand to $500 million. I.e. strong investor demand.
According to www.followon.com, lead manager was Bank of America Merril Lynch. Co-managers were Citi, Goldman Sachs, Barclays, RBC, Credit Suisse, Deutsche Bank, Morgan Stanley, KeyBank and Mitsubishi UFJ.
Some of the proceeds (they did up the bond $100m after all) “will go to other eligible green projects", which include the financing of, or investments in, equipment and systems that generate or facilitate the generation of energy from renewable sources, such as solar, wind and geothermal energy. So far so good.
NRG Yield's assets are about 43% "green". The company is a spin-off from NRG, a large US energy company (see Tom Konrad's interesting review). NRG Yield is one of a new breed of "yieldcos", listed companies with green assets that base their share offering on fixed rate dividends similar in nature to a bond coupon. Others include Hannon Armstrong, TerraForm Power and Greencoat. We think they have enormous potential to be the bridging vehicle between utilities and institutional investors, allowing utilities to effectively offload mature green assets from their balance sheets so as to recycle the capital into the next crop of projects.
The bond documentation states that there will be 'periodic' reporting on the use of proceeds on their website which will be available to investors within one year of the issuance date. As yet there have been no details on whether the bond will have independent review of it's green credentials.
Nicely done NRG Yield!