Triodos mulling €300 million wind energy securitisation

www.environmental-finance.com
London,16 April

Ethical bank Triodos is considering securitising a part of its portfolio of loans to renewable energy projects, to allow it to increase its lending to the sector. The Netherlands-based bank is discussing a potential €300 million ($400 million) securitisation at group level, but Bevis Watts, head of business banking at its UK arm, said no decisions have yet been taken.

"There's no immediate pressure, but we see an opportunity for Triodos and a huge market demand that isn't being met," he told Environmental Finance. Such a securitisation, "may allow us to participate in bigger deals", he said. Currently, the bank in the UK can lend up to ￡30 million ($45 million) to any one customer. The plan would involve securitising loans to wind energy projects - repackaging them as bonds, whose interest payments would be met with income from the loans. These bonds would be sold to institutional investors, moving some of its renewable energy portfolio off its balance sheet, freeing up lending capacity as well as raising capital.

Watts said that, in the UK, Triodos has seen competition to lend to smaller wind energy projects - in which the bank specialises - falling away in recent months. Moreover, the slow-down or cancellation of larger projects has seen wind turbines become available to smaller projects.

"The wind market is particularly busy for us," he said, with "a huge pipeline of deals in Ireland specifically ... The question for us is, will our pipeline outgrow our balance sheet?" He added that, a couple of years ago, the bank would simply have raised a fund, but the thinking is that pooling some of its existing debt into a securitisation - in which it would retain some participation - would make the investment more attractive in the current climate.

He declined to comment on which assets might be securitised, or on the likely performance of any bonds issued. He did, however, say that the bank is considering either a group-wide structure, or one that securitises only UK assets to avoid introducing currency exposures into the deal. The bank operates in the Netherlands, the UK, Ireland, Belgium, Spain and Germany, and specialises in financing "companies, institutions and projects that add cultural value and benefit people and the environment".

The bank's balance sheet stood at €2 billion as of last June, including around €300 million of loans to the renewable energy sector. It manages a further €400 million in off balance sheet renewables funds. In the UK, Triodos has lent ￡60 million ($90 million) to the wind sector, with a further ￡20 million committed to projects under construction.