India-based Yes Bank has raised funds through a second green bond issue this year, delivering progress on its pledge to fund 5 GW renewable energy projects in India over the next few years.
Yes Bank raised Rs 315 crore (~$49.2 million) from the International Finance Corporation (IFC) to fund renewable energy and energy efficiency projects in India, in the second green bond issue launched by Yes Bank.
The green bonds were issued at 8.95% for 10 years.
The bank had successfully raised $150 million from the first green bond issue launched in February this year. The issue was a resounding success as it was subscribed twice over, and also the first green bond issue in India. Several Indian banks and financial institutions had pledged to provide funding worth $57 billion for renewable energy projects over the next 5-7 years.
The Indian green bonds market is set for an explosive expansion as significant amounts of capital will be required to meet the country’s target of installing 175 GW renewable energy capacity by 2022. Green bonds also offer Indian banks and financial institutions an opportunity to raise capital at low cost from foreign investors who are happy to invest in debt instruments at rates significantly less than the rates available to Indian investors for government-backed instruments.
The point is well-proven from the first dollar-based green bond issue launched by the Indian Export-Import Bank in March this year. The Indian Export-Import Bank sold $500 million of green dollar bonds with a yield of 2.75%, with a huge installed capacity target of 175 GW renewable. The Bank is also expected to issue more bonds raising up to $1.5 billion over the next 2 to 5 years.
The Indian government has directed several public and private sector entities to launch green bonds to tap the international investments in renewable energy sector. The targets of such bond issues are expected to include the World Bank, IFC, Asian Development Bank, Japan International Cooperation Agency, and KfW.
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