We consider this to be positive. In particular, we are hearing market noise that Adani Power (ADANEM), a 99.7% coal dependent energy company, is preparing to issue a USD300mn SLB. Initial indications are that the conditions for coupon step-ups are two-fold (1) increasing “renewable power mix in the overall power purchase mix”; and (2) “reduce Scope 1 and 2 green house gas emission intensity”.
We would offer an alternative condition for coupon step-up for Adani Power – one which is both achievable, low-cost and highly impactful in terms of climate. In other words, the condition would be that if the new Carmichael coal mine build goes operational with Adani Power as a significant procurer of the mine’s coal, the coupon of the bond increases by 400 basis points. If that conditionality went through, we believe it would be the world’s most impactful SLB.