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Month: February 2024

Consortium acts as financial adviser to Ofgem on transfer of offshore wind farm transmission link

Posted on by George Roffey

Smith Square Partners Consortium acts as financial adviser to Ofgem on the £666 million completed transfer of Moray EAst offshore wind farm transmission link from MOWEL, a joint venture company owned by Ocean Winds (40%), Diamond Green Limited (33.4%), Equitix (16.6%) and China Three Gorges (10%) to Transmission Capital Partners (“TCP”)

Smith Square Partners Consortium acts as financial adviser to Ofgem on the £666 million completed transfer of Moray East offshore wind farm transmission link from MOWEL, a joint venture company owned by Ocean Winds (40%), Diamond Green Limited (33.4%), Equitix (16.6%) and China Three Gorges (10%) to Transmission Capital Partners (“TCP”) On 14 February, 2024 Ofgem announced its confirmation to grant an Offshore transmission licence to TCP. This sees the transfer of the £666 million offshore transmission link from MOWEL, the developer of the Triton Knoll offshore wind farm who are managed by Ocean Winds, TCP, an International Public Partnerships (“INPP”) backed consortium. The Moray East wind farm consists of 100 turbines, has a capacity of 950MW and is located 22km from the Aberdeenshire, Scotland coast in the Moray Firth. The Smith Square Partners Consortium has been advising Ofgem in relation to sales of offshore wind farm transmission assets since 2020 when it was first appointed by Ofgem for Tender Round 7 and continues to advise on tender rounds up to and including Tender Round 11. Its advice has related to transmission assets for eight offshore wind farms with a projected generation capacity of 7.9 GW and combined asset values of c.£6.1 billion. The Consortium comprises financial advisers Smith Square Partners and Centrus, with CEPA providing financial and related economic advice, tax advice provided by BDO and forensic cost reviews provided by Grant Thornton.

“Offshore windfarms have a crucial role in achieving a net zero carbon economy and are at the forefront of the UK Government’s targets with a target of 50GW of offshore wind by 2030. OFTO transactions will play a key part in this success with a very large pipeline of projects coming to market in the next couple of years. We are pleased to close this transaction with our consortium colleagues and this transaction emphasises our continued focus on the global renewable energy and energy transition markets.”

Scott Wilsher, Assistant Director – Centrus

UK Affordable Housing Market Update | February 2024

Posted on by Georgie Knight

Market Update

  • January CPI was flat at 4.0% against expectations of 4.2%. The market reacted with the 5-year and 10-year swaps increasing by c. 10bps on the day of the announcement. 
  • The 10-year swap rate (3.8%) is pretty much where it was after the last month’s ‘surprise’ CPI release. It was at 3.8% almost exactly a year ago too. It peaked in August 2023 at 4.7% and has bounced from the December 2023 low of 3.2%.  
  • Wage inflation was down from 6.7% in November to 6.2% in December, a sharp fall, but analysts expected a fall to 6%.
  • Natural gas and power futures are down almost 10% in the last month, so a materially lower energy price cap from April 2024 appears ever the more likely. It has certainly been a mild winter.
  • The SONIA curve remains remarkably flat with the 3.8% to 3.9% range from the 5-year through to 30-year swap rates.
  • New issue premiums have decreased significantly in recent weeks with some bond issues reporting premiums as low as 0 bps. This is quite unusual. 
  • The news that the Affordable Homes Guarantee Scheme has increased to £6bn and is extended with flexibility to invest up to 50% in existing stock is an encouraging opportunity for the sector. 


Implications for our affordable housing clients

The flat SONIA curve means clients can hedge over a tenor that suits their loan portfolio and swap rates remain attractive. Why take the risk of variable rates, particularly when you can reduce short term interest costs and remove that risk buffer? 

High investor demand and very low spreads creates opportunity for long term covenant light funding. 


Latest client activity

  1. Interest rate risk analysis: Using Resi Analytics, we’ve conducted thorough analyses of the interest rate risk buffers in our clients’ 2023 FFRs. The results showcase a spectrum of risk appetites, from no risk buffer to a cautious outlook.
  2. Strategic deal closures: Following strategic reviews and lender negotiations, several deals are set to close before year-end (31st March 2024). These initiatives aim to bolster liquidity headroom and improve covenant definitions. It is a busy time of year for banks, advisors and lawyers. 
  3. Active advisory on various fronts: Detailed strategic thinking is vibrant across our client base, we’re actively advising clients on strategic asset disposals, hedging strategies, covenant changes, and the impact of combining business plans.
  4. Private placement mandate launch: Amidst high investor demand and low spreads, we’re gearing up to launch an active private placement mandate. We anticipate increased private placement activity in 2024, providing valuable opportunities for our clients.

To learn more about our work in the affordable housing sector, click here.

For more information, please contact Paul Stevens or John Tattersall.