China wind project smoothed by political backing

Author: | Published: 18 Feb 2011

The Gansu Guazhou Ganhekou Wind Farm project financing in western China is the first foreign loan registered at the local State Administration of Foreign Exchange (Safe).

The deal illustrates that in some China deals, gaps in traditional risk allocation can be smoothed over by government and regulatory support.

The registration was conducted locally. So the parties had to register with a local branch of Safe in Jiuquan, in the Gansu province.

The parties had to file a complicated project financing structure with an embedded interest rate hedge into a Safe location – which itself was registering a foreign debt for the first time. "This was one of the key challenges in the deal," said Roger Lui, lead partner at Allen & Overy, who advised International Finance Corporation (IFC).

A loan of $140 million was extended to the project...