Northland Power prices solar bonds

Northland Power, the Canadian renewable-energy producer, has priced C$232m ($207m) of project bonds tied to 60MW of operational PV capacity in Ontario – its first-ever bond issuance backed by renewables.

Northland says it will privately place the bonds – carrying a 4.4% coupon – by 8 October, with Scotia Capital and CIBC World Markets co-leading the placement.

Backed by six ground-mount solar farms completed last year in Ontario, the non-recourse bonds have been given a provisional rating of BBB (high) by Canadian rating agency DBRS.

The bond proceeds will be used to repay existing bank debt, settle associated interest-rate swaps, and cover transaction costs, with the remainder going toward general corporate purposes.

Northland Power – which owns 1.36GW of generation capacity across the thermal, wind, solar and hydro sectors – has twice issued project bonds in the past, but never before bonds backed by renewables assets.

“We are very pleased with the continued strong interest shown by the financial community and the creation of value this financing brings to Northland,” says Northland chief financial officer Paul Bradley.

Northland is based and listed in Toronto, trading with a C$2.5bn market capitalisation.

In 2010 Northland received 130MW of PV capacity under Ontario’s feed-in tariff, spread across 10MW projects.

Eight of those projects are completed and selling power to the Ontario Power Authority, with the remaining five in construction. Once they are all operational, Northland’s solar portfolio will generate C$80m in annual EBITDA, the company has said.

While Northland’s renewables efforts have in the past been focused primarily on Canada, it has grabbed headlines in recent months by pushing aggressively into the European offshore wind theatre – buying majority stakes in the Gemini and Nordsee One projects in the Dutch and German North Seas, respectively.