OPIC issues first green guaranties in climate-friendly milestone

A significant milestone in the direction of the U.S. Government’s development financing plans was unveiled at the weekend as OPIC (Overseas Private Investment Corporation) issued its first green guaranties – government-backed bonds that have been developed in collaboration with investors, underwriters, environmental groups and leading capital market issuers.

The guaranties adhere to the Green Bond Principles of 2014, which dictate that transparency and full disclosure is forthcoming on all green projects. The first of OPIC’s green guaranties has raised $47 million to finance the Luz del Norte solar project in Chile, which is set to become Latin America’s largest PV plant.

This week, U.S. solar company SunEdison also closed debt financing on a $50 million, 20.8 MW solar PV project in Jordan with the assistance of OPIC and the European Bank for Reconstruction and Development (EBRD).

The green guaranties from OPIC support the funding of certificates of participation – something that the U.S. debt capital market has offered for a while. The difference with OPIC is that the agency allows for self-identification of these guaranties in adherence with the Green Bond Principles. This approach helps to encourage growth in an environmental sector increasingly eyeing financial returns.

For its part, OPIC will identify opportunities to issue green guaranties on renewable energy projects that are aligned with the Green Bond Principles.

"The offering of OPIC’s first green guaranties is a significant milestone," said OPIC president and CEO Elizabeth Littlefield. "This underscores commitments made by both OPIC and the U.S. government towards addressing the global challenge of climate change.

"This is the kind of innovative, impactful financing that has helped keep this agency nimble and effective over the past four decades as the world of development finance has been swiftly moving."