Power Finance & Risk is pleased to announce the short list for the following award: Project Bond of 2019.

The US private placement market has become more versatile in recent years, leading to a wave of innovative project bonds. We have selected five deals in this competitive category. Please let us know if your firm is missing from the credits.

CED California Holdings IV

The project bond refinancing of recently commissioned solar assets with investment grade utility power purchase agreements would not normally constitute a standout transaction, but executing the first such deal in California after Pacific Gas & Electric’s momentous bankruptcy filing was not for the faint of heart. Consolidated Edison Development pulled it off with a deal for its Wistaria and Panoche projects, totaling 247 MW, both of which have power purchase agreements with Southern California Edison. The deal was 3.5 times oversubscribed and closed on October 17.

Sponsor: Consolidated Edison Development

Total debt: $303 million

Order book: >$1 billion

Tenor: 19.2 years

Weighted average life: 11.4 years

Rating: NAIC-2 (no agency rating)

Coupon: 3.82%

Joint lead placement agents: Mizuho, MUFG

Issuer’s counsel: Greenberg Traurig

Investors’ counsel: Shearman & Sterling

Independent engineer: Black & Veatch

Insurance consultant: Moore-McNeil

Hill Top Energy Center

Ares Management Corp eschewed the bank market for the financing of its 620 MW Hill Top project in Pennsylvania, opting instead for a project bond. The structure was made possible by the project’s 8.5-year gas netback hedge, which allowed Kroll Bond Rating Agency to award the senior bonds a BBB- credit rating. Ares also obtained mezzanine debt from Investec to fund the issuance of a letter of credit to backstop the sponsor’s equity obligations. The deal closed on March 27. Coverage here.

Sponsors: Ares Management Corp, Abatis

Total enterprise value: $726 million

Senior term debt: $375 million

Tenor: 10 years

Ancillary facilities: $45 million

Mezzanine debt: $156 million

Placement agent: Morgan Stanley

Financial adviser: PJ Solomon

Borrower’s counsel: Morgan Lewis

Placement agent/investors’ counsel: White & Case

Sponsor’s local counsel: Ballard Spahr

Investors’ local counsel: Buchanan, Ingersoll & Rooney

Credit rating agency: Kroll Bond Rating Agency

EPC: Kiewit

GridFlex Generation

Gas-fired peakers in PJM Interconnection are not the traditional fodder for the US private placement market, but sponsor Rockland Capital was able to present an appetizing deal to investors last year with the refinancing of its 1.5 GW GridFlex portfolio. Structuring innovations including a capacity reserve account helped to sweeten the deal, to which the buy-side responded with a twice oversubscribed book. The deal closed on September 26. Coverage here.

Sponsor: Rockland Capital

Total enterprise value: $629.5 million

Total debt: $377.7 million

Tenor: 11.3 years

Weighted average life: 7.4 years

Ancillary facilities: $46 million

Placement agents: Cantor Fitzgerald, Crédit Agricole

Issuer’s counsel: Sidley Austin

Investors’ counsel: Milbank

Technical adviser: Black & Veatch

Market consultant: ICF

Credit rating agency: Kroll Bond Rating Agency

MPT Finco (Missisagi Power Trust)

Evolugen (formerly Brookfield Renewable Canada) tested the limits of Canadian investors' appetite for delayed-draw private placements when it issued a dual-tranche project bond to refinance a 488 MW hydro portfolio in Ontario. Not wanting to miss out on low rates, the sponsor raised enough debt to almost double the portfolio's leverage, but applied a one-year delayed-draw feature to about half of the issuance, to avoid being subject to prepayment penalties on the existing debt. The deal reached first close on December 2. Coverage here.

Sponsor: Evolugen

Total debt: C$628.3 million

Tenor: 10 years

Placement agents: Scotiabank, National Bank Financial

Rating: BBB

Rating agency: DBRS Morningstar

Green rating: E1 (S&P Global Ratings)

Issuer’s counsel: Torys

Investors’ counsel: McCarthy Tétrault

Independent engineer: Hatch

Market consultant: London Economics International 


GSRP Portfolio I

Distributed solar is a relatively new asset class in the private placement market and this Goldman Sachs Renewable Power portfolio, clocking in at around 600 MW across 379 sites, is among the largest that bond buyers have seen so far. It was also the first to obtain a BBB rating, one notch higher than most other transactions in the subsector.  The deal closed on December 10. Coverage here.

Sponsor: Goldman Sachs Renewable Power

Total debt: $500 million

Tenor: 25 years

Weighted average life: 21.1 years

Spread: T+190 bp

Coupon: 3.77%

Ancillary facilities: $65 million

Placement agents: Goldman Sachs (left), MUFG, HSBC (green structuring adviser)

Deal manager: Citi

Rating: BBB

Rating agency: Kroll Bond Rating Agency

Issuer’s counsel: Skadden, Fried Frank

Investors’ counsel: Latham & Watkins

Independent engineer: Enertis Solar

Market consultant: Leidos

Insurance consultant: Moore-McNeil

Climate bond certification: Sustainalytics

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