China Offers First Solar Asset-Backed Securities of $152 Million

A unit of Shenzhen Energy Group Co. issued China’s first solar asset-backed securities, raising 1 billion yuan ($152 million) in what could become a new source of financing for the capital-intensive photovoltaic power industry.

Shenzhen Energy Nanjing Energy Holding Co. will pay interest of about 3.6 percent to 4.5 percent annually for the securities backed by earnings from solar power generated from some of its projects, underwriter BOC International (China) Ltd. said on its official WeChat social media account. The size of the assets backing the financial products wasn’t disclosed. The securities have various maturities of as much as five years.

China’s ambitious push to install more solar power has prompted developers to seek lower capital costs through an ever-broadening portfolio of financing methods. The highest interest rate applied to the solar ABS is below the central bank’s benchmark rate of 4.75 percent for borrowings of up to five years.

The move is part of the government’s efforts to encourage companies to seek debt financing amid stock market volatility, said Nick Duan, a Beijing-based analyst from Bloomberg New Energy Finance. 

The issuance will help the solar-project owner to "recoup some capital investment in advance," he said.

Shenzhen Energy Group is a guarantor of the securities. Two calls to the group went unanswered.

— With assistance by Feifei Shen

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