CREC eyes Green Bond offering in 2025
By James A. Loyola
After raising P5.3 billion from its initial public offering (IPO), Citicore Renewable Energy Corporation (CREC) is considering the issuance of Green Bonds to help fund its aggressive $3-billion five-year expansion program.
During the press briefing after the listing of the firm’s shares at the Philippine Stock Exchange (PSE), CREC President and CEO Oliver Tan said they are looking at next year for the possible green bond issuance.
“This depends on the interest rate conditions. But it will most likely be next year since we would want to wait for a cut, for rates to go down,” he said adding that they have yet to determine the offering size.
Tan said the IPO proceeds plus earlier investment of the SM Group will be used mainly for the equity portion of the firm’s planned development of solar farms with a total capacity of five gigawatts over five years, particularly the one gigawatt target for the second year.
CREC currently has total solar power generating capacity of 285 megawatts and intends to continue building solar farms with the aim of completing one gigawatt of capacity per year to hit its five-year target.
He said the green bond proceeds will be used to fund the equity portion of the third batch of one gigawatt of solar plants adding that the bulk of the funding for their expansion will be from project financing at the rate of 30 percent equity and 70 percent debt sourced from local banks.
“We believe that local banks have enough liquidity to fund the renewable energy pipeline projects in the Philippines. This comes with a tenor of 10 to 15 years, mostly 15 years,” Tan added.
Internally generated funds from their operating solar farms will also play a bigger role in financing future projects as more of these are build and start operations.
“We’re also looking to have significant internal generated cash once the first two gigawatts to three gigawatts are operating. Therefore, we don’t foresee doing a stock rights offering in the near future,” Tan said.
Last April, CREC secured financing arrangement of up to P20 billion with Rizal Commercial Banking Corporation (RCBC) for the funding multiple solar power plant projects.
The firm said the projects will have a combined installed generating capacity of at least 600 MWdc and up to approximately 1 GW of solar energy capacity.
The financing deal, arranged by RCBC Capital Corporation, is slated to reach up to P20 billion in funding, starting with the signing of an initial tranche of P9 billion.
The structure is believed to be the first-of-its-kind project financing in the Philippines, which covers various project portfolios instead of the typical per-project financing structure.
The proceeds of the initial funding tranche will be applied towards CREC’s development of certain solar power plant projects in Batangas, Pampanga, and Negros Occidental.
The proceeds of subsequent tranches will be applied towards the completion of additional solar power projects in or additional generating capacity from CREC’s pipeline of projects in various stages of development.
Meanwhile, last March, SM Investments Corporation came in as a strategic partner in Citicore Energy REIT Corporation (CREIT) with the acquisition of a 28.79 percent stake for P5 billion from CREC.
CREIT said CREC, together with its wholly owned subsidiary Citicore Solar Tarlac 1 Inc., sold a total of 1.88 billion common shares in the real estate investment trust CREIT.