Canadian Solar issues Japanese solar project bond

The $27m transaction is the first asset-backed security arranged by a foreign sponsor in Japan’s solar sector.

Canadian Solar, one of the world’s largest solar power companies, has issued a JPY3 billion (€24.5 million; $27 million) project finance bond for its 10.2MW Aomori-Misawa Solar Power Plant in Aomori Prefecture, Japan. 

The non-recourse bond, which is backed by the project assets, has a maturity of 20 years. It features a two-year grace period and a fixed coupon rate of 1.4 percent. 

Shinsei Trust and Banking Company is the lender and the transaction was arranged by Goldman Sachs Japan Company. 

Expected to reach commercial operation by end of this year, the project received an investment grade rating of “A” from Japan Credit Rating Agency. The electricity generated from this project will be purchased by Tohoku Electric Power Company under a 20-year feed-in tariff contract at the rate of JPY36 per kWh. 

“In addition to giving us access to a very low-cost source of financing for our projects, this transaction is the first asset-backed security arranged by a foreign sponsor in the Japanese PV sector. The A investment grade rating is so far the highest for all PV-related project bonds issued in Japan, a testament to the high quality and bankability of Canadian Solar’s project pipeline in Japan,” said Shawn Qu, chairman and chief executive officer of the company.

The Ontario-based solar developer, founded in 2001, has a total project pipeline of 9GW, including an increase in the late-stage project pipeline to 2.4GW, according to its company website. In the past 14 years, the company has deployed over 13GW of modules in over 90 countries.