Wind farm first signed in Nicaragua

At the beginning of 2008, DnB Nord Bank in Denmark closed a US$56mn syndicated club deal for windmill producer Suzlon. The facility allowed the borrower to supply and install 19 wind turbines at a Nicaraguan wind farm. The financing has helped support the Central American country’s first ever wind farm, and will help greatly reduce its reliance on oil and other forms of imported energy.

The deal was financed through DnB Nord Bank, acting as lead arranger and co-confirmer, with its parent banks DnB Nor and NordLB acting as partipants.

The borrower Suzlon is based in India, but has its sales headquarters in Denmark and is a long-standing customer of DnB Nord. The company is considered the fifth leading wind turbine supplier in the world, and had over 10.5% of global market share in 2007, according to statistics published by consulting firm, BTM Consult.

Remarking on the importance of the deal, DnB Nord’s Flemming Lippert, head of trade and export finance in Denmark and Finland, notes: “In a single stroke this deal confirmed DnB Nord as a major player in the northern and Baltic rim for large cross-border transactions; re-affirmed Suzlon’s ranking amongst the world’s leading windmill producers; and focused attention on the potential of the Latin America energy sector.”

The deal was structured as a standby letter of credit, issued by the Central American Bank for Economic Integration (Cabei) and financed via a club loan, which was then lead arranged by DnB Nord, along with participanting banks DnB Nor and NordLB. Cabei is a supranational, which is owned and backed by a number of states in the Central American region, including Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

The turbines, each 2.1MW,  were imported by Consorcio Elico Amayo in Nicaragua, the firm in charge of managing the Eolico Amayo wind energy power project, which is situated in the Rivas region in the southwest of Nicaragua.

Cabei has previously supported this project, having granted it a US$71.2mn credit line in 2007. The renewables project aims to meet demand for electricity, reduce the country’s dependency on imported energy, as well as create a new source of employment for the local communities. The wind farm began commercial operations at the beginning of this year.

Deal Information

Borrower: Suzlon Wind Energy
Amount: US$56mn
Lenders: DnB Nord Bank (confirming bank and club deal arranger)
Other participants: DnB Nor; Norddeutsche Landesbank Girozentrale (NordLB); Central American Bank for Economic Integration (Cabei).
Tenor: 16 months
Date signed: January 2008