Brookfield is one of the most active players in the green debt markets in North America
After selling three green project bonds in the U.S. and marketing a new one in Canada, Brookfield Asset Management’s renewable power business is setting its sights on South America and Asia.
The Toronto-based company is selling bonds to refinance the existing debt of a pool of four hydroelectric facilities located in Ontario, according to a S&P Global Ratings. The securities are being sold via a private placement.
In Brazil, the company is gathering third party assessments on its assets — early work needed ahead of a potential deal. In India, where the company sees the potential for “rapid growth,” a separate bond is possible in the longer term, said Julian Deschâtelets, a managing director at Brookfield’s renewable power group.
With more than $50 billion of renewable power assets on four continents, Brookfield is one of the most active players in the green debt markets in North America. The company raised $1.2 billion by pricing the three bonds backed by U.S.-based assets in the past two years and Brookfield Renewable Partners has raised C$900 million of green corporate bonds in Canada over two separate deals.
“We see potential for more growth in the medium term for green debt tied to our actual investments,” said Deschâtelets. “It is about diversifying sources of debt capital.”
In Brazil where Brookfield has more than $3.5 billion of renewable power assets, any green debt offering would be its first of that kind out of that country. The potential for a vibrant green bond market is growing as access to cheap loans from state-owned Banco Nacional de Desenvolvimento Economico e Social is reined in under the current government.
“There is a great potential for us to be active there,” he said. “For Brazil it would be a local market, local currency.”
In India, Brookfield Renewable could issue green project debt in the local currency should market conditions allow, Deschatelets said. Alternatively, it could be a dollar denominated transaction. “Right now India is more difficult” with local bank and capital markets more challenging, he said. “A lot of issuers are looking to raise capital outside.”
Brookfield is in talks to invest $800 million in India’s largest green energy company ReNew Power Ltd., The Economic Times reported on Nov. 8, citing unidentified people familiar with the matter. A press officer for Brookfield declined to comment.
Finally, in China, where the firm is pursuing a “measured” growth strategy, the company could consider a green debt deal at some point he said. Brookfield has a roof solar panel operation with Singapore’s GLP Pte Ltd, and the joint venture has issued an $15 million offshore green bond.
Investors with green mandates make up just 15% to 20% of accounts taking part in Brookfield’s green bonds so far, Deschatelets said.
Still, it makes sense to have a presence in this asset type because that will grow, Deschatelets said. “It will be beneficial for us to have done work and issuance because over time it will lead to pricing benefit potentially,” he said.