Red Oak: Switching cost of debt in US power

In:

Power

Region:

Americas

Tom Nelthorpe

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Morgan Stanley Infrastructure’s recent refinancing of the Red Oak power plant took the asset out of the bond market and into the bank market via a ‘hedge toggle’ structure. Twenty years on from Red Oak’s first financing, the US is still searching for workable power market structures. Could the ‘toggle’ help US power sponsors live with market uncertainty?