Renewables Infrastructure secures innovative ESG linked debt funding

Renewables Infrastructure in talks to buy Swedish wind farm 1

Renewables Infrastructure secures innovative ESG linked debt funding – The Renewables Infrastructure Group Limited has successfully refinanced and expanded its revolving credit facility (RCF) at lower rates to support its investment in new renewable energy projects. The facility is used for short-term financing of acquisitions. The renewed RCF of £500m has been made available to TRIG for a three-year term and the larger size of the facility reflects the increased scale of acquisitions being made by thecompany. TRIG’s intention remains to pay back the money it borrows by issuing new shares. The RCF is currently undrawn.

The interest charged in respect of the renewed RCF is linked to the TRIG’s ESG performance. The interest rate and commitment fee vary based on performance against defined sustainability targets. Those targets include:

  • Environmental: increase in the number of homes powered by clean energy from TRIG’s portfolio
  • Social: increase in the number of community funds supported by TRIG
  • Governance: maintaining a low Lost Time Accident Frequency Rate (LTAFR)

The LTAFR is a key metric monitored by asset owners that measures the number of personnel injured and unable to perform their normal duties for seven days or more for each hundred thousand hours worked. The inclusion of this target aligns the cost of the renewed RCF with a key metric for TRIG: safety at work.

Performance against these targets will be measured annually with the cost of the RCF being amended in the following year.

The facility duration is three years to 31 December 2023. The consortium of lenders includes the existing lenders (National Australia Bank, Royal Bank of Scotland International and ING) and three new participants (Sumitomo Mitsui Banking Corporation, Barclays and Santander). The margin can vary between 184 basis point (bps), equivalent to 1.84%, and 194bps over SONIA (Sterling Overnight Index Average) – the replacement for LIBOR – for money borrowed in pounds, and 180 bps and 190bps over EURIBOR for money borrowed in euros, depending on the performance against the ESG targets.

Helen Mahy CBE, chairman of TRIG, said: “We’re very proud to have secured one of the first ESG-linked SONIA loans. We have set ourselves ambitious but achievable targets for the next few years which underline our commitment to sustainability and align our interests with our debt and equity investors.”

[This is the first we have heard of interest rates linked to ESG performance, but we think it’s a great idea. TRIG is well-placed to take advantage of this, given its size and investment focus.]

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