Canadian Solar issues landmark Japanese 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 developer, has issued a JPY3 billion (€24.5 million; $27 million) project bond for its 10.2MW Aomori-Misawa solar farm in Aomori Prefecture, northern Japan. 

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

Shinsei Trust & 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 the 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,” said Shawn Qu, chairman and chief executive officer of the company. “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.”

Founded in 2001 and based in Ontario, Canadian Solar has a total project pipeline of 9GW, according to its website. In the past 14 years, the company has deployed more than 13GW of solar assets in over 90 countries.

Canadian Solar last year sold three utility-scale solar facilities based in its home country to DIF, the Dutch fund manager. It also closed on the $203.7 million acquisition of three solar power plants in Ontario from US-headquartered KKR.