Let us now take a closer look at the securitisation process and how the transaction works.

(Click on the various points to explore each step of the process in detail)


Structure of the infrastructure securitisation transaction

1. Establishment of the operational SPV

The first stage involves the incorporation of an operational SPV (Special Purpose Vehicle) under Guernsey law, i.e. the company responsible for:         

  - design and build the plant;

  -hold infrastructure assets;

  - manage the energy project on an operational level;

  -generate cash flow from the sale of energy.

The choice of Guernsey is no coincidence. The jurisdiction is frequently used in international securitisation transactions due to a number of strategic advantages:

  • tax neutrality;
  • flexible regulatory framework;
  • high level of asset protection and bankruptcy remoteness;
  • strong recognition from international institutional investors;
  • high efficiency in cross-border operations

The Guernsey SPV thus becomes the industrial, operational and financial vehicle for the structure.

2. Technical, legal and financial due diligence

Before the transaction is structured, a comprehensive due diligence review of the project is carried out across three main areas.

-Technical due diligence

Includes analyses relating to:

  • plant availability;
  • solar radiation and energy performance;
  • network connection;
  • reliability of inverters and components;
  • O&M analysis and the asset’s useful life.

-Legal due diligence

It includes checks on:

  • authorisations and permits;
  • land ownership and availability;
  • regulatory and energy compliance;
  • the validity of PPA contracts;
  • corporate and contractual structure.

-Financial due diligence

Tests are carried out on:

  • sustainability of cash flows;
  • DSCR (Debt Service Coverage Ratio);
  • financial stress tests;
  • sensitivity analysis;
  • downside scenarios and market scenarios.

This stage is crucial for confirming the project’s financial viability and reducing the risk perceived by investors.

3. Structuring of tradable flows

The Guernsey SPV holds the economic rights to the future cash flows generated by the project, including:

  • revenue from the sale of energy;
  • PPA flows;
  • public incentives;
  • any carbon credits or RECs.

At this stage, the flows become the securitisation collateral, that is, the underlying collateral for the financial transaction.

In practice, it is precisely these future cash flows that will enable investors to be repaid and the coupons on the bonds issued to be paid.

4. Legal formalisation of the assignment of receivables

In order to legally transfer the cash flows to the Guernsey SPV, specific contractual agreements are entered into, including:

  • Assignment Agreement;
  • Receivables Purchase Agreement.

Through these contracts, the Guernsey SPV acquires the economic rights to the project’s future receivables.

5. Involvement of the Swiss bank

This is where the Swiss bank comes into the picture, playing a central role in managing and structuring the transaction.

Its functions may include:

  • financial structuring of the transaction;
  • opening and managing segregated accounts;
  • guarantee management;
  • payment of coupons to investors;
  • paying agent activities;
  • custody of financial instruments;
  • operational management of cash flows.

The presence of an international bank enhances the credibility and stability of the entire organisation.

6. Opening of segregated accounts

Segregated accounts dedicated to the transaction are opened within the Swiss bank.

These are accounts that are separate from the ordinary assets, contractually restricted and managed in accordance with specific financial waterfall rules.

Generally, four main accounts are used:

–Collection Account: receives all revenue generated from the sale of energy and PPA contracts.

-Reserve Account: contains a cash buffer to cover any unforeseen events or temporary reductions in cash flow.

–Debt Service Reserve Account (DSRA): this is a reserve set aside exclusively for the payment of interest and coupons to investors.

-Operating Account: used to cover the project’s operational and administrative costs.

This structure ensures greater security, transparency and control over cash flows.

7. Issuance of financial instruments

The Guernsey SPV then proceeds to issue financial instruments intended for professional and institutional investors, including:

Investors subscribe to these instruments by providing the capital required to finance the transaction.

Once the target funding amount has been reached, the project is launched or refinanced, and investors are gradually repaid through the revenue generated by the production and sale of energy.

A.C.O.F.I.

Contact: info@acofi.it

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