TRADE FINANCE: STEF
Global installed offshore wind farm capacity, 2019
29GW (GWEC)
says Chang. “We always get the very latest regulation updates and are more like a consultant in the industry right now.” She believes this also differentiates Deutsche Bank Taipei from other foreign banks in the capital.
Yunlin The work to attract local banks paid off, and the region’s first deal that really moved the needle was the 18-year tenor award- winning6
Yunneng Wind Power TWD82bn
(€2.3bn equivalent) EKF, Euler Hermes, and Atradius-covered loan and commercial loan financing, signed with 19 Taiwanese and international banks on 24 May 2019.
Yunlin monopiles made by Steelwind Nordenham arriving in Tainan, Taiwan
since 2006. However, over the past two years, this activity has intensified, with ECA deal structuring and the bank acting as the sole deal contingent interest rate swap hedge arranger in the Yunlin project financing. “Deutsche Bank’s competitive advantages lie in strong market risk appetite and execution capabilities, along with established expertise,” she notes.
By leveraging its deep expertise of offshore wind farm projects in Europe, Taiwan Country Chief and Head of Investment and Corporate Banking, Cynthia Chan, was keen for the bank to build its renewable energy portfolio in the country, and she encouraged Chang to make it happen.
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Due to their lack of expertise in the offshore wind farm sector, and deterred by the complexity of non-recourse project financing, state-owned local banks were initially reluctant to participate in offshore wind farm project financings. But their participation was critical for the industry’s ongoing development as they had Taiwanese dollar (TWD) liquidity. One of Chang’s first tasks was to explain to them how the industry worked, and provide support on risk mitigation, such as managing interest rate volatility with swaps. This involved giving a number of ‘roadshows’ and training courses.
“We have a very close dialogue − I would say partnership − with the government,”
The Yunneng Wind Power Co. was a special purpose vehicle (SPV) established to run the construction and operation of a 640MW offshore wind farm project located near Yunlin County on the west coast of Taiwan. The SPV was jointly owned by wpd AG (73%) and a Japanese consortium led by the Sojitz Corporation (27%).
Syndication of the financing was successfully closed with a 34% oversubscription four months after the launch. Given the tight timeline for drawdown after the 24 May signing, Deutsche Bank, together with the initial group of lenders, pre-funded the financing prior to close of syndication.
As Chang indicates, Deutsche Bank acted as the sole hedge coordinator and arranged a 10-year deal contingent interest rate swap hedge solution to enable the client to lock in a TWD fixed interest rate cost. By way of background, a deal contingent hedge is one of the most sophisticated solutions that allows a client to hedge a critical risk linked to a transaction
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