What’s Canadian Solar’s Leverage and Liquidity Position?



Canadian Solar’s interest expenses

Canadian Solar’s interest expenses fell considerably in 2Q16 to $11.9 million from $16.1 million at the end of 1Q16.

Canadian Solar’s (CSIQ) long-term debt at the end of 2Q16 was $828.5 million as compared to $818.5 million at the end of 1Q16. The majority of its long-term debt will be due for repayment in the next two years.

Also, the company had $1.37 billion in the form of short-term debt on its books at the end of 2Q16 as compared to nearly $1.35 billion at the end of 1Q16. However, the senior convertible notes outstanding were down to $128 million from $132.2 million at the end of 1Q16.

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Liquidity position

Canadian Solar (CSIQ) had about $1.0 billion in cash, cash equivalents, and restricted cash as of June 30, 2016, as compared to $1.0 billion as of March 31, 2016.

The upstream solar (TAN) industry is a capital-intensive business. It’s important for incumbent players like Canadian Solar, First Solar (FSLR), SunPower (SPWR), and Trina Solar (TSL) to maintain their liquidity position to raise low cost capital to fund their expansion plans.

Available options to raise capital

Canadian Solar believes that the current capital market situation is not favorable enough for a yieldco initial public offering. However, it’s planning to finance new projects through alternative options such as asset-backed securitization schemes.

On September 12, 2016, the company completed the initial issuance of $60 million commercial paper in the Chinese capital market to expand its financing options. Also, the company secured $95 million syndicated loan with Sumitomo Mitsui Banking on October 13, 2016, to fund its solar power projects in Japan.

Next, we’ll look at Canadian Solar’s project pipeline.


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