Sustainability project bond of the year: Smart Luz

Brazilian public private partnership (PPP) Smart Luz – a concession by Rio Luz, the municipal company that manages the city of Rio de Janeiro's public lighting system – finances a 20-year public lighting and smart city services sub-concession.

Last year it issued a R$925 million ($187.6 million) bond to switch the more than 450,000 public lights in Rio de Janeiro to LED technology, leading to an estimated energy consumption reduction of 65% with an estimated greenhouse gas emissions reduction of more than 110,000 tonnes per year.

The proceeds will also be used to create the first municipal internet of things network in Brazil that will control over 70% of the city's public lights and over 20,000 additional sensors.

The notes were issued in Brazilian Real but are guaranteed by the United States International Development Finance Corporation (DFC), and the notes settle in US dollars at the Brazilian Central Bank's currency transfer rate, which determines the maximum of the DFC's dollar-denominated guaranty.

"The Rio de Janeiro Smart Lighting project is a textbook example of successful sustainable financing; made possible by all stakeholders aligning with a common goal," said Yan Herreras, Vice President of finance at Smart Luz. "All members of the team were crucial to accomplishing what was an ambitious mission to transform the city of Rio."

The Smart Luz PPP consortium includes smart city infrastructure developer High-Trend Brazil.

Deal Highlights

Issuer: Smart Luz
Size: R$925 million ($187.6 million)
Maturity date: November 2032
Settlement date: 8 November 2021
Coupon: 12.25%
Use of proceeds: Energy efficiency, Smart city lighting
External review: Sustainalytics
Lead managers: Goldman Sachs
Credit rating: Fitch (AA+) Moody's Aa1
Principles/Guidelines: Green, Social and Sustainability Bond Principles