First Climate-Certified Project Bond in Egypt Locks in Investment Grade Rating
WASHINGTON DC, June 27, 2022 — MIGA has issued a guarantee of $98.3 million to Virtuo Finance S.a.r.l. (Virtuo), boosting the sustainable refinancing of six operational solar power plants in Egypt’s Benban Solar Park (Power Plants), the largest photovoltaic (PV) solar park in Africa. The refinancing will reduce financial costs, improve overall financial viability, and generate cost savings to be shared with the Government of Egypt.
The Power Plants will be refinanced through issuance of a first-of-its-kind green bond by Virtuo. Scope Ratings, the leading European credit rating agency, assigned the bond a rating of BBB+, a higher rating than Egypt’s sovereign debt rating. The issuance was arranged by MUFG Securities EMEA.
The bond also benefits from certification by the Climate Bond Initiative and has been independently verified by DNV, a leading technical consultancy. Furthermore, the bond meets MIGA’s Performance Standards—an international benchmark for identifying and managing environmental and social risks.
“This groundbreaking climate-certified bond supported by MIGA and EBRD is catalyzing opportunities for institutional investors in emerging markets and developing economies,” said Junaid Ahmad, MIGA Vice President for Operations. “The MIGA-EBRD partnership is an example of how multilateral financial institutions can work with client countries to deliver climate finance at scale.”
This bond issuance was split into two tranches. The first, amounting to $250 million, was distributed among the European Bank for Reconstruction and Development (EBRD), and other Development Finance Institutions (DFIs). A second tranche of $84.5 million, was distributed to international private institutional investors.
The second tranche is enhanced by MIGA’s political risk insurance cover and a Liquidity Support Facility (LSF) provided by EBRD. Together, they provide credit enhancement for the project that is essential for attracting private capital investment—especially major institutional investors who are mobilizing investment contributions for the first time in Egypt.
The MIGA-covered tranche is also reinforced by the Agency’s E&S Performance Standards, which will ensure that E&S risks and impacts are managed, and development opportunities are strengthened through the life of the investment. Experience to date has shown that MIGA’s Performance Standards contribute to sustainable investment, add value to clients by helping them improve business performance, and that the standards are routinely met throughout the life of the project.
“MIGA is proud to back this innovative financing in support of renewable energy accompanied by our E&S standards. Meeting all three—climate, environmental and social—makes this a stand-out transaction in the sustainable investment market. This is an example of how climate and E&S performance standards, underpinned by MIGA’s due diligence and monitoring, can combine to redefine what it means for a bond to be truly sustainable.” said Ethiopis Tafara, MIGA Vice President and Chief Risk, Legal and Sustainability Officer and Partnerships.
MIGA’s nineteen-year guarantee will cover Virtuo against the risks of breach of contract, expropriation, war and civil disturbance, and currency transfer restriction.
Operational since 2019 with an installed capacity of 380-megawatt (MW), the Power Plants are part of Egypt’s landmark Solar Feed-in-Tariff Program (FiT Program), which has mobilized private investments in the country to build one of the world’s largest
PV generation parks. The Power Plants are contributing to meeting Egypt’s goal of generating 20 percent of national electricity needs from renewable sources by 2022.
Egypt will be hosting the 27th session of the Conference of the Parties (COP 27) that will take place in Sharm El-Sheikh in November 2022, demonstrating its commitment to global efforts in this area.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war and civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued over US$65 billion in guarantees across 120 developing countries.
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