Japan: Canadian Solar raises $66 million with dual-tenor green project bond

Canadian Solar, a vertically integrated Tier-1 Chinese solar firm, has secured ¥7.4 billion ($66.0 million) in project financing for its 27.3 MWp solar power plant in Tottori Prefecture, Japan.

The Tottori green project bond consists of a dual-tenor maturity of 1.5 and 18.3 years. These two dates represent the initial and extended tenor respectively, within a single-tranche of the bond, making full repayment of the bond flexible, while enabling a potential sale of the solar power plant to the Canadian Solar Infrastructure Fund, recently listed on the Tokyo Stock Exchange.

The Japan Credit Rating Agency assigned the Tottori project an investment grade rating of “A”, the highest rating available to the solar sector in Japan, making it the fourth project by Canadian Solar to it.

The asset-backed, non-recourse bond was issued at par and pays a fixed coupon of 1.2725% per annum during the initial tenor and, if extended at the option of Canadian Solar, 1.3113% per annum. Goldman Sachs Japan acted as the bond arranger and Hitachi Capital Trust was appointed as trustee.

“We are very proud to announce the issuance of a second dual-tenor green project bond at a low coupon rate. This solidifies our position as the leading international issuer of green project bonds in Japan. Investors recognize our strong record of building high quality and bankable solar power projects. This project will contribute to the growth of Canadian Solar Infrastructure Fund as a leading renewable energy fund in Japan. We will continue to look for opportunities to promote renewable energy platform in this market,“ said Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar Inc.

This year, Canadian Solar has been very active both in regard to the raising of funds and project development. In March, it secured a $36 million credit facility with Japan’s Sumitomo Mitsui Finance and Leasing, and a few days later in April finalized a $47 million inaugural dual-tenor green project bond with Goldman Sachs Japan for a 19 MW solar project it is building in Gunma prefecture.

In addition to the Tottori power plant, which achieved commercial operation in August 2017 with a 20-year PPA feed in tariff contract signed with local utility Chugoku Electric Power at the rate of  ¥40 ($0.32)/kWh, the module manufacturing heavyweight has also connected to the grid 52.5 MW of solar capacity at four sites across Japan in the first half of 2017.