First Solar, the largest solar manufacturer in the US, announced on Friday that it had entered into a five-year revolving credit and guarantee facility for US$1 billion.

The facility includes up to US$250 million which is available for the issuance of letters of credit (L/Cs).

Important component

The L/C component in the facility is important because substantially all of the contracts in the First Solar's backlog - the total value or capacity of projects that have been contracted or committed but not yet completed or delivered at the time of booking - typically require payment security.

Cash deposits, bank guarantees, surety bonds and L/Cs can amount to 20 per cent of the contract value according to the solar panel maker.

The backlog is an important metric for solar energy producers as it provides visibility into future revenue and growth prospects and includes projects that are under development, under construction, or in various stages of the procurement process.

Participating banks

J P Morgan Chase Bank acted as lead arranger and is administrative agent for the facility.

Additional banks participating in the facility include joint lead arrangers Bank of America, Citibank, Credit Agricole CIB, and PNC Bank, as well as participating lenders BNP Paribas, Goldman Sachs Bank USA, HSBC Bank USA, MUFG Bank, Standard Chartered Bank, and Truist Bank.

Growing business

First Solar shares jumped over 4 per cent in early trading on Friday after it announced the new facility, pushing the value of its shares up more than 27 per cent year-to-date.

The company plans to commission a new 3.4-gigawatt manufacturing plant in India this year, a new 3.5-gigawatt factory in Alabama next year, and expand its existing facility in Ohio by 0.9-gigawatt by 2026.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.