Wigton Windfarm has signalled it is coming to market to raise $5.8b.

WIGTON Windfarm is going to the local capital market with a bond issue to raise upwards of $5.8 billion in two tranches.

In tranche one, it will seek to raise up to $3.9 billion with a coupon rate of 6.3 per cent maturing in 4.5 years and expiring in September 2026; and in tranche two, it will attempt to raise $1.9 billion with a coupon rate of 7.25 per cent maturing in five years and expiring in March 2027. Interest and principal on tranche one is payable quarterly, whereas in tranche two interest is payable quarterly and principal is paid at maturity.

The proceeds of the issue are to be used mainly to restate its existing debt under more favourable terms. The capital raise is being arranged by NCB Capital Markets. It was recently announced that Wigton entered into a financial advisory services agreement with the brokerage house.

No details have been provided about the agreement but it comes in wake of Wigton trying to improve its financial position amid declining revenues and escalating costs.

Meanwhile, the Caribbean Information and Credit Rating Services Limited (CariCRIS) has assigned an 'adequate' creditworthiness rating to the proposed bond issue.

The CariBBB regional scale rating indicates that the level of creditworthiness of this proposed debt obligation, adjudged in relation to other obligations in the Caribbean is adequate. According to CariCRIS, “the national scale ratings indicate that the level of creditworthiness of this proposed debt obligation, adjudged in relation to other obligations in Jamaica is good.”

CariCRIS has also assigned a stable outlook on the ratings. The stable outlook is based on CariCRIS's expectation of continuity in the key credit drivers supporting the ratings over the next 12-15 months, with all debt service commitments expected to be paid in a timely manner over the period.

“The ratings are driven by Wigton's leading position as an independent renewable power producer in Jamaica with business operations that are sustained by long-term contracts. Wigton's efficient operations are supported by well-maintained wind turbines,” the ratings agency says.

CariCRIS observes that, “Wigton's solid track record of profitability and above-average return metrics, healthy liquidity and strong debt servicing capability further drive the ratings. Wigton's operations are supported by satisfactory corporate governance and robust risk management practices. These rating strengths are tempered by the company's high revenue susceptibility to the vagaries of nature and wind variability along with the lack of government support and protective legislation for local renewable energy producers.”

BY DURRANT PATE Observer business writer pated@jamaicaobserver.com

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