03-09-2010
The European Investment Bank (EIB) has chosen BBVA as the first financial institution in Europe to implement an innovative initiative for the development of renewable energy and energy efficiency operations.
This new structure entails two clearly differentiated facilities:
€200 million finance facility (‘funding’ for BBVA) under a Framework Loan for a new project portfolio. The facility would operate similarly to the EIB’s global loans. BBVA receives the funding and applies it to the asset for project financing.
The sectors included in this finance facility are wind power, biomass and any renewable energy or energy efficiency project.
Through this facility, the EIB would fund up to 50% of the investment in new projects, and the remaining 50% would be provided by BBVA or by the market.
The portfolio will be analyzed depending on the amount of the material investment for the projects included. Therefore, this is a portfolio analysis under criteria set by the EIB, and not an individual analysis. Thus, for projects with an investment cost up to €25 million, the EIB will only require minimum information (ex-post analysis). For amounts between 25 and 50 million euros, an individualized file will be required for each one, with further details on the operation (ex-ante analysis). Finally, for projects over €50 million euros, an individual analysis will be required.
A €200 million risk sharing mechanism for a portfolio containing projects which have already been formalized. Risk assignment will be instrumented through a EIB guaranty. The risk sharing facility is focused on existing risks (less than three years old) with major companies in the renewable energy sector. The guaranty may not cover more than 50% of the amount of the material investment for the projects, and will release BBVA from the capital cost required for this type of operations.
Therefore, the combined amount of both facilities is €400 million, divided into the two aforementioned mechanisms: finance facility (€200 million) and risk sharing (€200 million).
BBVA started working on this initiative around six months ago in coordination with the Structured Financing (Project Finance Energy) and Multilateral Financial Institutions areas. It has also taken part in the design and structuring, advising the EIB at all times.
