Banque Internationale à Luxembourg (BIL), a corporate member of Luxembourg-Poland Chamber of Commerce, successfully facilitated an issuance of a Green Bond to be used in financing solar power plants in Poland.
Banque Internationale à Luxembourg (BIL), a corporate member of Luxembourg-Poland Chamber of Commerce, successfully facilitated an issuance of a Green Bond to be used in financing solar power plants in Poland. A client of BIL Switzerland active in the sustainable energy sector and seeing a big opportunity in the Polish power market needed financing for the project of developing solar power plants in Poland. BIL facilitated this transaction, thus, helping the client gain financing and offering investors an interesting financial product.
Aside from bank loans, issuance of bonds is a way of seeking financing. Often companies create or use an already existing Special Purpose Vehicle (SPV’s – companies created for a specific purpose) to isolate some assets or risk and keep these off the balance sheet of the parent company. Luxembourg is often chosen due to its flexible and business-friendly legal framework. Listing on a stock exchange is a great way to gain visibility and attract investors to a financial product. ESG (Environmental, Social and Governance) finance has been gaining momentum, big and small market players are launching ESG initiatives. The Luxembourg Stock Exchange is a forerunner in sustainable finance and home of the Luxembourg Green Exchange (LGX), the world’s leading platform for sustainable securities. In order to be able to display a Green Bond on LGX, the bond must be issued in accordance with internationally recognized standards for sustainable debt securities, the most known being ICMA’s Green Bond Principles (GBP). To prevent greenwashing (a product pretending to be green), it is important to put in place a sound Green Bond framework and a second party opinion, or an external review, which is generally provided by an ESG rating agency.
Solar project in Poland:
GPC chose Poland to develop this solar energy project due to the country’s high percentage of energy coming from coal (79% vs 19 % for EU averages) and its urgent need to decarbonize. Poland has to transition its power mix to renewables as much as possible to achieve EU’s common goal of having at least 32% of renewable power by 2030 and becoming climate neutral by 2050. These binding targets come from Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources.
The project itself entails the development and finalization of 4 portfolios of photovoltaic power plants in Poland, one of them being finalized and scheduled to be in operation in Q2 2021 (86 MW / y). Thanks to the experienced team of international experts, proven efficiency and attractive prices, the company won auctions in Poland to build additional project portfolios for several hundred MW. These will be operating by Q4 2022 as the condition of the auction was that the sites would be connected to the grid within 24 months (auction in December 2020).
The issuance:
Given all these elements, Golden Peaks decided to issue the € 20 000 000 bond via a Luxembourgish SPV and list the bond on the Luxembourg Stock Exchange, for display on LGX as a Green Bond. To ensure the bond issuance would meet all ESG criteria, the project team worked with Vigeo Eiris, a subsidiary of Moody’s that evaluates organizations’ integration of social, environmental and governance factors into their strategies, operations and management. The issuance completes the equity invested by the shareholders of the company and senior loans allocated by a consortium of European banks.
This is where BIL stepped in:
· BIL Switzerland structured the transaction (2 years maturity, annual coupon, 7% interest, etc.) and found investors who subscribed to the placement.
· BIL Luxembourg acted as issuing agent and facilitated the delivery of bonds to investors via clearing systems and will act as paying agent and pay coupons and reimburse the investment at maturity as described in the prospectus of the bond.
The bond was successfully listed on the Luxembourg Stock Exchange and displayed on LGX as a Green Bond on the 12th of January. You can find all relevant information on the LuxSE website: https://www.bourse.lu/issuer/GoldenPGBI/101678
You can contact contact@bil.com for more information on the offered services: structuration, placement, issuing and paying agency, listing agency, administration of SPV.
