Institutional investors snap up Canadian, Korean environmental fixed income issues

Investor appetite for wind-backed and green bond issues

Institutional investors have snapped up two separate environmentally-linked fixed income issues – from Canada’s Brookfield Renewable Energy Partners and Korea’s Export-Import Bank.

Both issues, the first a C$450m (€335.7m) Ontario wind-farm backed bond and the second a US$500m (€382.4m) green bond, were oversubscribed.

Toronto-listed Brookfield Renewables said its offering for its 166MW Comber Wind farm in Essex County, Ontario was Canada’s first broadly marketed and rated wind financing.

The BBB-rated bonds bear an all-in interest rate of 5.13% and fully amortize over a period of 17.7 years.
The facility went live in 2011 and has a 20-year power purchase deal with the Ontario Power Authority.

“We are grateful for the strong response to this offering from institutional investors across Canada,” said Sachin Shah, Brookfield’s CFO. “The transaction was oversubscribed with significant demand resulting in the participation of more than 25 investors.“As the first public wind deal in Canada, the offering attracted many institutions new to the sector and should help to increase and diversify future financing opportunities for renewable power companies and investors alike.” Scotia Capital arranged the deal.

“The offering attracted many institutions new to the sector”

Meanwhile, the Export-Import Bank of Korea issued its first climate friendly bond, a $500m, five-year issue with a coupon, or interest rate, of 1.75%. It’s the first green bond marketed by an institution that is not a multi-lateral development bank, according to industry body the Climate Bonds Initiative.

There was $1.8bn of orders from 100 investors for the issue, with 47% going to the US while European investors took 32% and 21% respectively. Asset managers accounted for 55%, banks 31% and insurance and pension funds 5%. The issue was co-managed by SEB and Bank of America Merrill Lynch.