Goldman Sachs to establish a $1 billion renewable energy bond

Goldman Sachs is planning to establish a bond facility which will target $1 billion in renewable energy investments in Japan. This latest initiative is part of their 2012 plan to channel $40 billion into renewable energy projects over the next decade.


The Japan Renewable Project Bond Trust, as it will be known, will provide institutional investors with an opportunity to invest in grade-related securitised renewable energy bonds. The initial focus will be on solar energy and will be expanded to other renewable energy sources as such projects arise. Goldman Sach’s initiative follows a rush of solar energy investments after preferential tariffs will mandated by the Japanese Government after the March 2011 earthquake and tsunami which triggered the Fukushima nuclear power plant disaster.


A dozen projects across Japan for which Goldman Sachs organised funding have raised $74 million through the sales of revenue bonds since late 2013. Seven of these projects were “A” rated. In a recent interview, Vice President of Goldman Sach’s infrastructure and structured financing group Toru Inoue stated that momentum in the renewable energy space has increased more in the last 2 years than in the previous decade. In August 2012, they established Japan Renewable Energy which constructs and operates renewable energy projects.


Although it is difficult to estimate the size of Japan’s total market for securitized infrastructure products including renewable energy and it is dwarfed by the massive Japanese Government bond market, the Bank of Japan’s massive quantitative easing program has kept yields low. Investors who purchase long term infrastructure backed notes receive their principal back on maturity and collect a stream of coupon payments.

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