Yieldcos could fund Asia’s renewables drive

Author: Ashley Lee | Published: 18 Aug 2015

Asia’s project bonds market has been slow to take off, as domestic banks continue projects lending. But another capital markets product may be more successful

While project bonds have been seen as a potential solution, a myriad of legal and structural concerns have limited their use.

Many market participants are, however, focussed on developing capital markets products that can finance Asia’s infrastructure needs. They are realising it might be more realistic to turn to the yieldco; an equity product similar to the real-estate investment trusts (Reits) and business trusts familiar to institutional and retail investors in the region.

"More established players who may have assets outside the US are hoping to mimic the US experience, and are looking at how they can bundle assets in various Asian jurisdictions in a yieldco," said Etienne Gelencsér, partner at Shearman & Sterling in Tokyo.

Yieldcos are typically used in the US to...