Tue Jun 04, 2024 06:22 AM ET:
Greenko Energy Ltd. has decided to raise a Japanese Yen or JPY, denominated loan to fully refinance its originally
$400 million up-to-18 month bridge loan which is due in August 2024, altering course from an earlier plan to refinance its instead through a public issue of USD bonds, two sources familiar with the matter said.
MUFG and Sumitomo Mitsui Banking Corporation are among banks involved in arranging the loan, the sources said, adding that documentation for the loan is in process.
The Indian renewable power producer in February attempted to raise $450 million through a public bond under 7%, but could not get the pricing it wanted due to
volatile interest rates and shelved the plan, as reported.
The company raised the bridge loan in February 2023 from a group of banks including Barclays, BNP Paribas, DBS Bank, Deutsche Bank, HSBC and JPMorgan to refinance its outstanding $435 million 6.25% bonds due in the same month. The bridge loan had a six-month extension option - which the company exercised when it was unable to print bonds this February - taking the loan maturity to August, the first and second source familiar said.
A JPY loan would be cheaper despite the hedging costs being higher for JPY compared to USD, the second source and a third source familiar said. The pricing in USD terms is likely to be inside 6%, the second and third source familiar said.
Greenko, MUFG and SMBC did not respond to requests for comment.
UPDATE 5: Greenko Holdings Not Proceeding USD Bond This WeekUPDATE 5: 7:10 a.m. ET 2/8/2024: Greenko Energy Holdings has decided not to go ahead with its proposed USD bond issue this week due to volatility in interest rates, after the U.S. Federal Reserve on Jan. 31 decided to maintain the overnight federal funds rate between 5.25% to 5.5%, two sources close and one familiar with the situation said. The company may look at an issue after the Lunar New Year, the sources said.
Bookrunners are not engaging with the investors for now, one of the sources close said.
On Feb. 5, Reorg reported that Greenko had decided to hold off pricing its proposed USD bonds due to volatility in interest rates.The company had initially expected to price the bonds as early as Feb. 5 and was targeting under 7% for a 3.5-year bond, as reported.
Greenko is trying to raise around $450 million to refinance its outstanding $425 million bridge loan due in the fiscal second quarter ending Sept. 30, 2024, as reported.
Greenko did not respond to requests for comment.
UPDATE 4: Greenko Puts USD Bond Pricing on Hold Amid Volatile Interest Rates, Co. to Wait for Rates to StabilizeUPDATE 4: 3:46 a.m. ET 2/5/2024: Greenko Energy Holdings has decided to hold off pricing its proposed USD bonds today, Feb. 5, due to volatility in interest rates after the U.S. Federal Reserve on Jan. 31 decided to maintain the overnight federal funds rate between 5.25% to 5.5%, three sources close to the development said. The company had expected to price the bonds as early as today and will now be waiting for the rates to settle before going ahead with the issue, the sources said.
U.S. Treasury yields saw volatility after the Jan. 31 meeting at which Federal Reserve chairman
Jerome Powell announced the benchmark interest rate would remain unchanged, and guided that the Fed was unlikely to cut rates at its March meeting.
That volatility has led Greenko to push pricing of the bond to later this week, the sources said.
Greenko is trying to raise around $450 million to refinance its outstanding $425 million bridge loan due in the fiscal second quarter ending Sept. 30, 2024, as reported. The company had initially expected to price a 3.5-year bond under 7%, as reported. Investors are keen on a tenor of 3.5 years as against five years which was also under consideration, the sources said.
Greenko did not immediately respond to requests for comment.
–Malvika Joshi, Dipika Lalwani
UPDATE 3: Moody’s Assigns Ba2 Rating to Greenko Mauritius' Proposed USD Notes OfferingUPDATE 3: 9:27 a.m. ET 2/1/2024: Moody's Investors Service today, Feb. 1,
assigned a Ba2 rating to the proposed backed senior unsecured USD notes of Greenko Mauritius, a wholly owned subsidiary of Greenko Energy Holdings with a stable rating outlook.
Moody’s said the rating for the notes to be issued by Greenko Mauritius is in line with the parent company’s corporate family rating, or CFR, of Ba2. The stable outlook takes into account the rating agency’s expectation that Greenko Energy’s credit quality is appropriately positioned at the Ba2 level, reflecting continued support from shareholders, which partly offsets the funding and execution risks arising from the company’s substantial capital spending program.
The size of the bond is likely to be around $450 million,
as reported by Reorg on the same day. The proposed notes, proceeds of which will be used for refinancing, are unconditionally and irrevocably guaranteed by the parent company. Greenko Energy obligations under the guarantee will rank at least pari passu with all of its other present and future unsubordinated and unsecured obligations, the rating agency noted in the report.
Moody’s said if the parent company maintains a higher consolidated FFO/debt of above 3% to 4% on a sustained basis or if Moody's assesses that shareholder support could be materially stronger than its current assumption, an upward ratings momentum can occur. Also, weak operational performance or reduced support from Greenko Energy’s shareholders could bring the rating under downward pressure.
Separately, Fitch Ratings on Jan. 31, has
assigned Greenko Mauritius’ proposed notes a first-time rating of BB. Fitch based the notes rating on the parent company’s ratings.
The rating agency previously on Jan. 21
revised its outlook on Greenko Energy’s long-term issuer default rating, or IDR, to stable from negative, and affirmed the IDR at BB.
According to the Fitch report, a net debt/EBITDA at below 4.5x on a sustained basis provided that there is no significant increase in Greenko Energy’s overall business risk profile, could individually or collectively, lead to positive ratings action.
Following factors could lead to negative ratings action–EBITDA/net interest expense sustained below 1.5x; any shareholder changes that affect the company's risk profile; significant adverse developments related to storage projects; and failure to mitigate foreign-exchange risk adequately, the Fitch report states.
UPDATE 2: Investors Indicate 7.3% to 7.5% Pricing for 3.5Y Holdco Greenko Bond UPDATE 2: 8:15 a.m. ET 2/1/2024: Investors are asking for a pricing of around 7.3% to 7.5% for Greenko Energy Holdings’ senior unsecured bonds with a 3.5-year tenor or around 7.75% for a five-year tenor, at least five investors told Reorg citing initial feedback provided to the bookrunners.
The company, however, is keen to price the 3.5-year bonds under 7% or the five-year bonds around 7.5%, the sources said.
Reorg reported earlier today, Feb. 1, that Greenko has launched a senior unsecured bond which could carry a tenor of 3.5 years to five years. The bonds will be issued by Greenko Mauritius and guaranteed by the parent – Greenko Energy Holdings, according to terms reviewed by Reorg.
Proceeds from the issuance will be utilised for prepayment or repayment of existing debt of the issuer as well as for expenses incidental to repayment of existing indebtedness, and for expenses incurred for the issuance of the bond, the terms show. The fund raised will be used to refinance an around $425 million bridge loan due in the fiscal second quarter ending Sept. 30, 2024, as
reported.
Barclays Bank, BNP Paribas, DBS Bank, Deutsche Bank Singapore, HSBC and JPMorgan Securities are joint bookrunners, as reported.
Greenko did not respond to a request for comment.
UPDATE 1: Greenko Launches ~$450M Public Bond, Pricing As Early As Feb. 5UPDATE 1: 9:51 p.m. ET 1/31/2024: Indian renewable power producer Greenko Energy Holdings has launched an around $450 million senior unsecured bond, according to key terms seen by Reorg. The tenor is likely to be between 3.5 years and five years, according to two sources close and a source familiar.
The structure of the bond will be similar to Greenko’s $500 million 5.5% bonds due January 2025, the sources said, adding that the company is hoping to price the bond as early as Monday, Feb. 5.
According to the key terms, the issuer will be Greenko Mauritius with Greenko Energy Holdings providing a parent guarantee. The Regulation S issue is expected to have a ‘Ba2’ rating from Moody’s and a ‘BB’ rating from Fitch, according to the terms.
Reorg first
reported on Jan. 23 that the company is talking to its relationship banks about a potential public USD bond issue to refinance an around $425 million bridge loan, which matures in the second fiscal quarter ending September 30.
Barclays Bank, BNP Paribas, DBS Bank, Deutsche Bank Singapore, HSBC and JPMorgan Securities are joint bookrunners, according to the terms.
The same group of banks also provided the bridge loan to the company in February 2023, the sources said. The loan, previously reported as paying SOFR+ 400bps, pays all-in pricing of SOFR+ 450bps, the sources said.
Greenko could not be reached for immediate comment.
–Malvika Joshi
Original Story 4:01 a.m. UTC on Jan. 23, 2024Greenko in Talks With Relationship Banks for Potential Public USD Bond to Refinance ~$425M Bridge LoanGreenko Energy Ltd. is talking to its relationship banks about a potential public USD bond issue to refinance an around $425 million bridge loan which matures in the second fiscal quarter ending September 30, two sources close to the situation said. The bank has had talks with Barclays Bank, Deutsche Bank, DBS Bank, HSBC and JPMorgan, the sources said.
The company raised a bridge loan from the same banks in February 2023, as reported. The loan had an effective maturity of 12 months but has been extended by six months through the exercise of an extension option, the sources said. Proceeds were used to refinance Greenko’s $435 million 6.25% bonds originally due in February 2023, as
reported. The bridge loan pays around SOFR+ 400 bps, as reported.
The company is talking to its relationship banks about taking out the bridge loan with either a USD bond or a long-term loan, the sources said.
Indian renewable power producers have been tapping the USD public bond market to refinance their holdco debt while raising INR debt to fund their capex needs, the sources said.
ReNew and
Continuum both tapped the USD bond market last year to refinance holdco debt, as reported.
Greenko did not respond to requests for comment.
–Malvika Joshi, Dipika Lalwani