Balfour Group to Run First U.K. Wind-Farm Link Funded With Bonds
A group including Balfour Beatty (BBY) Investments Ltd., Equitix Ltd. and AMP Capital Investors Ltd. won a license to run a transmission link connecting offshore wind to the shore, the first such project funded with bonds.
The license is to own and operate the 317 million-pound ($513 million) high-voltage link to the Greater Gabbard wind farm off the coast of Suffolk, eastern England, industry regulator Ofgem said today in a statement. The 500-megawatt venture is owned by units of utilities SSE Plc (SSE) and RWE AG.
Ofgem awarded the license after a bidding process designed to spur competition connecting wind farms to land under efforts to lower costs for consumers, who ultimately pay in their bills. Previous offshore transmission ventures have been financed mainly with bank debt, the regulator said.
The project is also the first U.K. infrastructure venture to benefit from the European Investment Bank’s Project Bond Credit Enhancement program. The initiative seeks to lure money from institutional investors such as pension funds and insurers by cutting infrastructure project risk. That allows ventures to access cheaper finance on capital markets, according to Ofgem.
Moody’s Investors Service assigned a provisional A3 rating with a stable outlook to 304 million pounds of senior-secured bonds issued by Greater Gabbard OFTO Plc, ahead of a final sale.
The rating reflected the “strong regulatory framework that provides for stable and predictable cash flows over the 20-year life of the project,” Moody’s said in a note on Nov. 18.
HSBC Holdings Plc (HSBA) is lead bond arranger and also a joint bookrunner along with Banco Santander SA. Both were involved in promoting the bond, according to Ofgem.
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