| HONG KONG
HONG KONG Feb 12 Solar panel makers are tapping
capital markets for the first time in more than two years,
shoring up battered balance sheets and improving their ability
to pay off billions of dollars of debt as demand for the green
JinkoSolar Holdings, JA Solar, Canadian
Solar and U.S. companies including First Solar
and Sunpower Corp have raised about $3 billion in the
past year, over according to industry estimates and Thomson
Reuters data, mostly through private share placements, public
share issues and convertible bonds.
Their efforts were boosted by China's decision in July to
quadruple its solar power capacity to over 35 gigawatts (GW) by
2015 and Japan's need to replace the nuclear power it shut off
after the 2011 Fukushima disaster.
These factors, as well as rising demand from the United
States, has helped to at least double the share price of many
solar firms from mid-2012 levels. Chinese firms dominate the
global solar industry, which saw a slew of defaults triggered by
overcapacity and dwindling demand.
Solar panel makers were largely absent from the capital
markets between 2011 and mid-2013 when the industry was mired in
a severe slump. Analysts expect global panel shipments to rise
by at least a tenth this year to more than 40 GW.
"I would characterise it as a re-engagement with the capital
markets after a period of absence," Robert Todd, director of
renewable energy banking at HSBC in Hong Kong, told Reuters.
"You are going to continue to see this trend."
China's top 10 solar makers - among the largest solar
manufacturers in the world - had accumulated 100 billion yuan
($16.5 billion) in debt as of June 2013, with an average
debt-to-asset ratio exceeding 70 percent, official data showed.
Based on industry estimates, at least $10 billion, or two-
thirds of the total debt, matures over the next 12 months. For
example, Trina Solar, one of China's biggest panel
makers, had $1.1 billion in total bank borrowings at
end-September, including $966 million in short-term debt, most
of which matures within a year.
Chinese solar panel makers have been relying predominantly
on short-term bank loans for financing. Thanks in part to the
government push, Chinese lenders have rolled over panel makers'
short-term facilities and will continue to do so this year,
encouraged by the recovery in demand, industry executives and
These banks, however, are still reluctant to extend any new
credit, executives and bankers say, a sign that the solar
sector's prospects remain cloudy.
Defaults on their offshore debts by LDK Solar and
Suntech Power Holdings, once China's largest
photovoltaic module maker, and the bankruptcy of Suntech's
biggest China unit last March exacerbated investors' worries
about the creditworthiness of the sector.
It also remains unclear whether the current demand by China
and Japan, which some analysts expect will account for 40-45
percent of global installations this year, will remain strong
over the medium to long term.
"Having gone through the industry turmoil in 2011-12, banks
are still jittery," said Ziguang Zhou, analyst at Chinese
investment bank Ping An Securities in Beijing. "It's still
regarded as a high-risk sector."