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Strategic swap advice for Burbo Bank Extension offshore windfarm
Case studies

Strategic swap advice for Burbo Bank Extension offshore windfarm

Background
  • JCRA acted as a strategic swap advisor and benchmarker for this transmission asset for the Burbo Bank Extension offshore windfarm.
  • The bank debt was being refinanced by way of a fixed rate bond issue, of which a portion of the proceeds would be used to settle the sponsor’s swap MTM obligation to the bank group.
  • Four international banks provided the total debt with only three of these four providers being involved in the swap.
  • Additionally the project required an RPI revenue swap, which JCRA structured, priced and managed.
Our Approach
  • JCRA provided Ofgem with the inputs to the financial model and updated IRS and RPI swap pricing well in advance of FC on an ad hoc basis to keep them informed of how the market was moving and the impact on the model.
  • JCRA negotiated, on behalf of Ofgem, the execution spreads applicable at point of trade for the type, notional and tenor of swaps that were required to hedge the asset.
  • JCRA suggested using only three of the four debt providers for the swaps on the basis of the appetite and ability to price competitively and ultimately provide the public sector with best value.
Benefits
  • An audit trail of pricing negotiated and agreed before and at FC was provided for the public sector along with a letter detailing the final rates achieved and termsheets reflecting what had been transacted.
 

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