What we will Cover

01 Project Bond 02 Differences

03 Issuer 04 Investor
03

05 Case Study 06 Sectors Benefited

What are Project
Bonds?
Why Project Bonds?
Deal Cycle of a Project Bond
Step 1 Step 3
Due Diligence Marketing & Closing

Step 2
Drafting & Rating
Project Bonds Vs. Corporate Bonds
Project Bond Corporate Bond
Issued to Finance a Specific indivisible large-scale Issued by a corporation in order to raise financing
capital investment Project for a variety of reasons

Repaid from only the revenue from that specific Repaid from the revenue generated by the Company
Project

Secured by the Project itself and the Offtakers Secured by all the firm’s various assets and cash
creditworthiness (the party that buys the product or flows that offer an important cross-insurance
uses the service), mechanism
Project Bonds Vs. Traditional Debt
Project Bond Traditional Debt
A way for financing or refinancing project assets by Provided to companies by a bank - with a variable
selling, in effect, IOUs - with interest payments rate of interest
annually

Highly tradable in the market i.e., one can sell it in Not tradable generally in the market, as they are an
the market without waiting for its maturity agreement between two parties

The bond yields are likely to be low and are a safer The loan interest rates are generally higher and in
investment case of unsecured loan, they would be much higher.
Investor’s Perspective
Advantages Disadvantages

Investor may prefer the flexibility of debt

Stable and long-term investment
financing to the stricter terms of bond
● Investors favour long-term financing
agreements like PPA for stability and
● Not an obstacle for infrastructure or
predictable cash flows
energy projects because of feasibility
● In case of Power Purchase Agreement studies
(PPA), investors are comfortable with
● Unidentified risks in developing
bond maturities matching the full
countries
tenor of the PPA
 Issuer’s Perspective
Advantages Disadvantages

● Alternative to traditional debt ● Funds received upfront but

funding methods expenditure is spreaded
● Bonds are usually more flexible than ● May lead to negative carry
loans condition
● Does not affect the ownership of the ● Must pay interest even if other
company projects are non-profitable
● Less expensive and volatile than
equity
Case Study
Continuum Wind Energy Ltd.
 Introduction: Continuum Wind Energy
Ltd.
What is Continuum Wind Energy Ltd.?
It is sponsored by Singapore-based Clean Energy Investing Ltd,
the indirect wholly-owned subsidiary of a Morgan Stanley fund
entity, New Haven Infrastructure Partner

Continuum Green Energy is focused on development, design,

construction and operation of renewable energy projects in
India.
They are committed to generating and providing clean power in
a sustainable manner.
 Issuer and Investor

● Issuer - Continuum
The proceeds will be used to refinance the project debt at six of its operating entities
and to set up wind projects in India.

● Key Investor - IFC

It is one of the world's largest financiers of climate-smart projects for developing
countries and It has invested upto 10% in continuum.
.
 The Bond
● The offering raised US $561 million and was heavily
oversubscribed

● There are six operating entities that comprise of

Restricted Group One

● The Off Takers are Madhya Pradesh and Maharashtra

● The Continuum Green Bond has Power Purchase

Agreements with commerce and industry customers in
Gujarat and Tamil Nadu
Sectors Benefited

Infrastructure Power

● Similar trend in Power sector

● Issuance of project bonds
overcomes obstacles in using ● Indian Renewable Energy
traditional financing options developers issued green bonds

● E.g. IRB Infrastructure, GMR’s ● Green bonds planned by the

Airports Government of India to be
issued
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