Q&A WITH DEALMAKERS IS BELOW. CLICK 'SHOW MORE' TO VIEW IN FULL Tan Hoan Cau Corporation JSC has reached financial close on an ECA-backed facility for its 33 MW Huong Linh I wind farm project in Vietnam with LBBW as sole foreign debt provider. The financing solution, which...show more
Q&A WITH DEALMAKERS IS BELOW. CLICK 'SHOW MORE' TO VIEW IN FULL
Tan Hoan Cau Corporation JSC has reached financial close on an ECA-backed facility for its 33 MW Huong Linh I wind farm project in Vietnam with LBBW as sole foreign debt provider. The financing solution, which involved a local bank’s guarantee, sets the foundation for international investors, sponsors and banks to support the ambitious renewable initiative (6.000 MW until 2030) promoted by the government.
Q & A with Stefan Rethmeier, Associate Director Export Finance Asia/Pacific, LBBW & Valeria Krepis, Director Export Finance Origination, LBBW.
Can you highlight the social impact of this deal/project?
The project supports the governmental renewable initiative to target 6.000 MW of installed wind capacity in 2030 with its first attempt to “go green”. It takes advantage of the strong winds in the highlands of the Quang Tri Province to produce clean energy, cut Vietnam’s CO2 emissions and improve the infrastructural and living conditions in the area. The positive economic impact has the potential to transform a very remote and almost vacant area into an industrial and services area with more opportunities for income improvement for local residents. The financing is covered by EKF and therefore complies with international ESG standards.
What challenges were faced in structuring this loan, and how were they overcome?
As the local PPA from EVN is not considered to be fully bankable yet and due to the lack of a MoF Guarantee support, a local bank guarantee was required for risk mitigation. The major challenge was to align all local parties especially with regard to prevailing local regulations, project deadlines and typical ECA requirements as well as with international documentation standards. In particular, the negotiation of one of the first cross-border on-demand guarantees issued by a Vietnamese bank including the necessary local bank approvals required constructive discussions and structural efforts on both sides. Local support of our Representative Office and an unremitting cross-border team spirit helped us overcoming several challenges.
If you were to do this deal again, how would you do it better?
Additional work in the beginning, when entering new markets, turns out to be valuable experience for repetition deals which we are currently working on. And of course, banking is people’s business, therefore: seeking face-to-face negotiations as early as possible and building up a relationship to the involved parties is the key driver of success.show less