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 thus far.
It was also the first to obtain a BBB rating, one notch higher than most other transactions in the subsector.
"The challenge has always been that if you have 50 offtakers and 50 projects, how do you evaluate each and every one of them?" said Matt Odette, managing director at MUFG – one of the placement agents alongside Goldman Sachs and HSBC – during a recent PFR roundtable. "But the rating agencies have been pretty flexible in terms of looking at things on a portfolio basis, even including unrated counterparties to the extent that they’re a small portion of the total. That makes it possible to take these very large portfolios and market them effectively."
Kroll Bond Rating Agency was the rater on this deal.
Though the structure originally planned for the deal had to be tweaked, Goldman was able to raise $500 million for 25 years with a coupon of 3.77%. In its final form, the deal was oversubscribed and the launch spread of 190 bp over Treasurys was inside initial price thoughts.
“The offering provides us with additional capital as we seek to continue to invest in renewable energy projects that address the desire of a growing number of corporations, governmental and educational institutions to obtain power from clean energy sources,” said Jon Yoder, who oversees GSRP as managing director and head of Goldman Sachs Asset Management’s renewable power group.
Sponsor: Goldman Sachs Renewable Power
Total debt: $500 million
Tenor: 25 years
Weighted average life: 21.1 years
Spread: T+190 bp
Ancillary facilities: $65 million
Placement agents: Goldman Sachs (left), MUFG, HSBC (green structuring adviser)
Deal manager: Citi
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
See all of the 2019/2020 awards