- The plants will be refinanced under the green project bond.
- The plants will have a combined capacity of 380MW.
Renewable energy provider, Scatec has announced plans to refinance a non-recourse project debt for six power plants in Egypt. The plants with a combined capacity of 380MW will be developed through the issuance of a 19-year US$334.5 million Green Project Bond.
According to the firm, the refinancing will provide increased leverage, extended tenor, and reduced interest costs to improve Scatec’s and its project partner’s future cash distributions from the power plants.
A report from The GlobeNews Wire notes that the Project Bond benefits from a Climate Bond certificate from the Climate Bond Initiative. This innovative climate finance transaction is the first of its kind in Africa. It has been distributed to a consortium of development finance institutions, comprising the European Bank for Reconstruction and Development (EBRD), the US International Development Finance Corporation (DFC), the Dutch entrepreneurial development bank FMO and German Investment Corporation DEG, alongside private institutional investors from around the globe.
Multilateral Investment Guarantee Agency (MIGA), a part of the World Bank Group, and EBRD risk mitigation instruments were incorporated into the structure to facilitate distribution to the private sector investors, including major institutions for whom these are first-ever investments in Egypt. This innovative capital markets exercise has benefitted from the proactive encouragement of the Government of Egypt. Mitsubishi UFJ Financial Group acted as arranger for the bond issue.
The credit enhancement structure establishes an efficient precedent for future transactions, including the prospect of an investment-grade credit rating for the green bond.
Scatec CFO Mikkel Torud said, “with this innovative green transaction, we have gained access to the international debt capital markets for project financing, improved our financing terms and supported Egypt’s ambition to become a green hub in the Middle East. Once again, we have demonstrated our ability to find innovative financial solutions and new funding sources to enhance project returns.”