Acciona Wind Farms Aim for Project Bonds

Two units of Spain’s Acciona are set to begin investor meetings this week ahead of what bankers and analysts say would be LatAm’s first wind energy project bonds. Looking to replace debt initially done in the loan market, the BBB minus rated Oaxaca II and Oaxaca IV projects are seeking respective $164.5m and $167.5m 2031 bonds with an average life of 13 years, according to sources familiar with the process. The key for moving funding away from the bank market is the operating projects’ lack of construction risk, as well a strong track record for wind generation nearby, most notably the Eurus facility also developed by Acciona. “This model has been used in many locations around the world,” Alberto Santos, analyst at Fitch, tells LatinFinance, including the US and Europe. He says the issuers’ investment grade rating reflects the location, proven technology and Acciona’s international status. In addition to being the region’s first wind project bond, he notes it is also unusual to have two separate transactions for a pair of wind farms that are nearly identical. The most recent comparable transaction, bankers say, might be a US solar power bond closed in February. Berkshire Hathaway-sponsored Topaz Solar’s $850m BBB minus rated 5.75% 2039 bond now trades inside of 5.50%. That the CFE is locked into a 20-year power purchase agreement is another strength of the Oaxaca deal, Fitch notes. Bankers suggest pricing should be viewed as a spread to CFE, just as the recent Brazilian drillship project bonds were viewed as paying spreads to Petrobras. “Financing construction in the bank market and replacing it later in the bond market is a template we should see more of,” says a banker on the deal. This has already been done with other assets, such as the drillships, he notes, and makes sense given the limitations on bank funding in recent years. The Oaxaca roadshow begins today in Boston, and visits New York, Chicago and Los Angeles through July 24, with additional meetings pos