Trine negotiates the pricing with the borrower and uses an internal pricing model that takes a starting point in the profitability of the underlying financed projects or assets. Profitability is measured as IRR (internal rate of return).

Trine’s internal pricing model (please note that the % is only an example):

Firstly, we forecast the IRR of the financed assets in the local currency by forecasting the revenues and costs of the assets over time. Revenues are typically income from off-takers (energy users) paying for energy consumed, and costs would be maintenance, insurance and administration fees, among others.

The currency of our borrowers is typically weaker than the loan currency (EUR/USD), and therefore we need to adjust the expected IRR of the project to the loan currency. This adjustment is done by considering the pricing of government bonds. An assessment is done on the difference in government bond pricing for that market in relation to the European market, thus resulting in a yearly market expectation in terms of devaluation over time. This allows us to forecast the IRR of the portfolio in the loan currency.

Secondly, Trine deducts the fixed management fee charged by Trine. Trine targets to receive no more or less than 3%. However, the exact management fee on each loan may be slightly different to 3% due to insurance guarantees and tier rating bonuses to investors.

Finally, Trine aims to find a balance between the interest rate offered to investors as well as the remaining margin for borrowers. The reason this balance is important is to ensure that the borrower can build a buffer over time if any unexpected event occurs and to make sure the borrower has an incentive long-term to keep maintaining and collecting revenues from the portfolio over time. Trine strives to offer the most attractive risk-adjusted return to investors by not pricing loans above what the underlying portfolios can service and thus ensuring investors are protected from potential future credit losses.

For more information or if you have any questions, including inquiries about our Credit Policy, please contact us at hello@trine.com.