The Bank of China and Santander have lent US$145mn to JA Solar, a leading manufacturer of solar power products.

The facility will be used to produce 300MW solar modules for a project in Brazil and is noteworthy in being the first solar PV financing to receive buyer’s credit insurance from Sinosure, China’s state-owned export insurer.

JA Solar is a Shanghai-based company and will export the panels to Enel, the Brazilian energy giant. The loan shows that the banking sector has confidence in China’s solar exporters, despite the high-profile default of Yingli Green Energy last year.

In May 2016, Yingli, another solar company, defaulted on loans worth Rmb1.76bn (around US$270mn at the time) and entered into restructuring discussions with its creditors. The company had previously been a frequent visitor to the debt markets, borrowing heavily at low rates of interest from state-owned banks such as the China Development Bank and the Bank of Communications.

Its bankruptcy, along with that of the real estate developer Kaisa Group in 2015, was viewed by some as a sign of a sea change in the Chinese government’s policy towards failing companies. More often than not, companies were propped up by government funds in order to stop them failing. The instance of Kaisa Group in particular was billed as a test case for foreign investors seeking to recoup losses from failing Chinese companies.

As it is, JA Solar has no such issues. The loan was guaranteed by Enel’s parent company and the solar company’s president Jian Xie says it was a symbol of its creditworthiness and reputation on the debt markets.

“This transaction demonstrates that the financial community recognises the quality and reliability of JA modules, and that they feel confident in committing large amounts of capital to JA-powered projects. This transaction represents an important milestone for solar project development in emerging economies, because it is a model for financing structures that can reduce the cost of capital and accelerate the pace of development. We look forward to seeing this financing model support further solar deployment in Brazil and other emerging markets,” he says.