Norway-headquartered renewable energy developer Scatec announced on Thursday that together with its partners, it has refinanced the non-recourse project debt for six solar power plants in Egypt, with a total capacity of 380 megawatts (MW), through the issuance of a 19-year $334.5 million non-recourse Green Project Bond.

The company said in a press statement that the refinancing would provide increased leverage, extended tenor, and reduced interest costs, which will improve Scatec’s and project partner’s future cash distributions from the power plants.

The Bond benefits from a Climate Bond certificate from the Climate Bond Initiative and is the climate finance transaction of its kind in Africa, the statement noted.

It said the transaction has been distributed to a consortium of development finance institutions, comprising the European Bank for Reconstruction and Development (EBRD), the US International Development Finance Corporation (DFC), the Dutch entrepreneurial development bank FMO and German Investment Corporation DEG, alongside private institutional investors from around the globe.

Multilateral Investment Guarantee Agency (MIGA), a part of the World Bank Group, and EBRD risk mitigation instruments were incorporated into the structure to facilitate distribution to the private sector investors, including major institutions for whom these are first-ever investments in Egypt.

Mitsubishi UFJ Financial Group acted as arranger for the bond issue, the Scatec statement said.

The credit enhancement structure establishes an efficient precedent for future transactions, including the prospect of an investment grade credit rating for the green bond, according to the statement.

“With this innovative green transaction, we have gained access to the international debt capital markets for project financing, improved our financing terms and supported Egypt’s ambition to become a green hub in the Middle East. Once again, we have demonstrated our ability to find innovative financial solutions and new funding sources to enhance project returns,” said Scatec CFO Mikkel Tørud.

This exercise had the proactive backing of Egyptian government.

“The refinance is being granted for six operational photovoltaic power plants participating with capacity 380 MW in the Benban Solar Park with total capacity 1,465 MW, initiated as part of the Egyptian government’s ambitious Sustainable Energy Strategy for the period ending 2035. The Benban Solar Park is funded by private sector capital, enabling the Egyptian government to support its goal of generating 20 percent electricity from renewable energy resources by 2022,” said Mohamed Shaker, Egypt’s Minister of Electricity.

Egypt’s Minister of Finance Mohamed Maait added: “Due to the credit enhancement structure, as well as the Egyptian economy’s exhibited resilience during the COVID-19 pandemic, better refinancing terms have been obtained for this transaction, which is a hoped-for development that green financing is obtained at better terms compared to other traditional financing options. We aim to continue the path of encouraging additional sustainable financing options in the future.”