Last year was exceptionally busy for infrastructure financing, with project finance teams at major banks working at full capacity on a range of deals from wind and solar power plants to airports, railways and roads.
One new category asset that features prominently in The Asset Triple A Sustainable Infrastructure Awards 2023 is electricity connectors, with large-scale financings in Abu Dhabi, New York State, the United Kingdom-Germany and Saudi Arabia-Egypt. More are on the way. As the installed capacity of renewable energy grows rapidly, it makes sense to have power flowing across borders in either direction, depending on wind and solar production and electricity demand at any particular time of day.
The Europe deal of the year is NeuConnect‘s £2.4 billion (US$3 billion) power transmission line running 725 kilometres subsea between the UK and Germany. The sponsors are Meridiam, Allianz Capital Partners, Kansai Electric Power, and Tepco.
The Asian sponsor element brought with it support from the Japan Bank for International Cooperation (JBIC), alongside the European Investment Bank and UK Infrastructure Bank. A strong lending group included Bank of China (BOC), Sumitomo Mitsui Banking Corporation (SMBC), Société Générale, and Nippon Life Insurance Company.
The winner for North America is the US$5.2 billion senior debt financing for Champlain Hudson Power Express. The project will transmit clean energy supplied by Hydro Quebec to provide 20% of the energy demand of Manhattan. A small group of mandated lead arrangers was put in place for the very sizeable loan, which aided smooth and fast execution, featuring Société Générale, MUFG Bank, Mizuho Bank, and Canadian Imperial Bank of Commerce. As the project nears completion it will be able to access the bond markets to take out the bank debt.
The Middle East deal of the year is yet another connector project. The offshore operations of Abu Dhabi National Oil Corporation (Adnoc) currently run on gas turbine generators, but will be connected to the national grid via two high-voltage direct current (HVDC) subsea lines making up the Lightning subsea transmission project. The sponsor group is Adnoc, Taqa, Korea Electric Power Corporation (Kepco), Kyushu Electric Power, and EDF. The US$3.2 billion construction debt with US$720 million equity bridge was arranged by BNP Paribas, Mizuho Bank, Standard Chartered, and SMBC. There was export credit agency (ECA) support from Export-Import Bank of Korea (Kexim) and JBIC.
The Africa deal of the year award goes to a rural electrification project in Angola, aimed at bringing much needed power supply to communities via 60 local solar sites. Standard Chartered structured a €1.29 billion (US$1.40 billion) syndicated green term loan for the Ministry of Finance, with Euler Hermes of Germany coming in as lead ECA, reinsured by Cosec of Portugal and K-SURE.
The South America award reflects the high level of activity in the liquefied natural gas industry over the course of 2022. Fluxys/EIG Global Energy Partners acquired GNL Quintero, the largest LNG regasification terminal in Chile, while keeping state-owned ENAP as a 20% partner. BNP Paribas stepped up as sole underwriter on the sizeable US$700 million acquisition financing.
The Central Asia award goes to the financing for Uzbekistan’s first utility-scale wind farm, the 500-megawatt Zarafshan project sponsored by Abu Dhabi Future Energy Company (Masdar). Growing global interest in Central Asia is reflected by the lending group comprising Asian Development Bank, European Bank for Reconstruction and Development, International Finance Corporation, Dutch Entrepreneurial Development Bank (FMO), Japan International Cooperation Agency, Natixis, and First Abu Dhabi Bank. The US$460 million deal was also notable for featuring Etihad Credit Insurance in one of its first major international projects.
Moving on to the global sectoral deals, there is also a strong emphasis on renewable energy, but the year was also notable for a number of large-scale projects involving transport infrastructure.
One of the most high profile is the vast renovation and construction programme at John F Kennedy Airport in New York, which is named public-private partnership (PPP) deal of the year. The sponsor group, including Ferrovial and Carlyle, decided late in the process on a fully underwritten US$6.6 billion bank facility, which was put together very rapidly against a background of rising interest rates. Mandated lead arrangers included MUFG Bank, SMBC, HSBC, and Société Générale. And there was also a strong Asian presence within the coordinating lead arranger group, including BOC, Korea Development Bank, Kookmin Bank and Mizuho Bank.
The rail transport deal of the year is the financing for the 503km electrified line that will connect Turkey‘s capital Ankara to the third-largest city Izmir. The financing package is a combination of ECA funding and commercial facility, structured as a €2.4 billion green loan, with UK Export Finance as the lead ECA. The joint mandated lead arrangers, coordinators and bookrunners were Standard Chartered and Credit Suisse, with participation from a large group of lenders including HSBC, Société Générale, Deutsche Bank, and BOC.
CFA franc loan
The road transport award goes to the Cameroon Road Toll Plazas PPP, sponsored by the Fayat-Egis consortium TollCam. This loan is denominated in the CFA franc, the currency used across 14 African countries. With its branch network and CFA franc deposit base, Société Générale Cameroun was able to lend 32.5 billion CFA francs (US$52.5 million) alongside Société Commerciale de Banque (SCB Cameroun). However, Cameroon regulations do not permit term loans with tenors above seven years, so GuarantCo stepped up with a liquidity extension guarantee to take the final tenor to 14 years.
A partial credit guarantee also incentivizes the initial local currency lenders to remain in place for years 7-14. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the UK, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands through FMO and the PIDG Trust, France through a stand-by facility, and Global Affairs Canada through a repayable facility.
The renewable energy deal of the year is awarded to the US$2 billion multi-ECA covered green facilities for the battery gigafactory being built in Hungary by South Korean firm SK On. The gigafactory will be SK On’s anchor production site in the European Union, which has a strategic goal of bringing a proportion of battery manufacturing inside the EU. There was ECA support from both Europe and Asia, from K-SURE, Kexim and Euler Hermes. HSBC was green loan coordinator, ECA coordinator and mandated lead arranger, while the mandated lead arranger group featured ANZ, Crédit Agricole CIB, BNP Paribas, MUFG Bank, SMBC, and Société Générale.
The global water sector award goes to the US$822 million loan for the Shuaibah 3 desalination plant, sponsored by Acwa Power and Public Investment Fund via Water & Electricity Holding Company. The project involves the construction of the Shuaibah 3 seawater desalination plant with the financing granted in both conventional and Islamic facilities. The loan is structured on a soft mini perm basis with a pricing step-up and a cash-sweep mechanism to incentivize refinancing once the construction risk falls away. Standard Chartered was green loan coordinator, mandated lead arranger and bookrunner. The other mandated lead arrangers and bookrunners were MUFG Bank, Abu Dhabi Islamic Bank, BOC, National Commercial Bank, Korea Development Bank, Saudi Investment Bank, Saudi National Bank, and Warba Bank.
The renewables refinancing award goes to the US$700 million green bond offering from Sweihan PV Power Company, sponsored by Taqa, Marubeni Corporation, and Jinko Solar.This was a complex refinancing of existing debt facilities for the Noor Abu Dhabi solar plant, which started operation in 2019. Lead managers were BNP Paribas, Citi, First Abu Dhabi Bank, HSBC, MUFG Bank, and SMBC Nikko. As the first green project bond out of the MENA region, meeting the ICMA Green Bond Principles, it is an important deal for future capital market take-outs across the United Arab Emirates.
The global power deal of the year is yet another interconnector project. The Saudi-Egypt connector is the first large-scale HVDC interconnection in the Middle East and North Africa, which will allow the exchange of 3,000MW of electricity, flowing in multiple directions between Badr in Egypt, to El-Madinah El-Munawara via Tabuk in Saudi Arabia. Standard Chartered and SMBC arranged a US$566.4 million loan to the Saudi Electricity Company, structured on the Islamic concept of commodity murabaha. The 14-year financing is backed by the Swedish Export Credit Agency EKN.
These are among the winners of the Asset Triple A Sustainable Infrastructure Awards 2023.
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