Japan’s offshore wind power sector has been attractive lately, the deals in the open seas would require bigger financing. Compared to the previous financing, the deals would take two ports locations leaving the room for international lenders to compete. Thus, bankers are likely to expect fierce competition. The government has targeted around 10GW of offshore wind capacity by 2030 and 45GW by 2040. Lei Zhang, Societe Generale’s head of the energy+ group for North Asia delivered an argument. He stated that other international lenders would see interesting business opportunities in Japan’s wind market.
Meanwhile, Yoshiaki Inoue, the Project Finance Research Institute’s managing director, argued that there are many lending appetites. In particular, there have been interests showing up among Japanese lenders for loans with yen denomination. He added that the pricing competition might really happen. Thus, it would attract loan margins to low levels that cannot be seen overseas. Meanwhile, pricing in Japan is somehow lower than the offshore market. The interest margin of over 100bp is more attractive than single-digit-margins for plain-vanilla corporate loans. This is around 50bp for other renewable power deals.
Development Bank of Japan, MUFG, Mizhuo Bank, Shinsei Bank, SocGen, Mitsui Banking Corp, Sumitomo Mitsui Banking Corp, and Sumitomo Mitsui Trust Banks have signed Green Power Ishikari’s loan. They are selling down their options to many investors like Japanese regional banks as well as insurers. In addition, the government reviews auction rules especially for offshore wind farms in the open sea. This is because the country is in need of renewable energy production especially during the Ukraine invasion.
