India’s IDBI Bank Raises $350 Million Through Green Bonds

IDBI Bank has become India’s first public-sector bank to raise funds through green bonds in a testament of the hugely attractive renewable energy market in the country.

IDBI Bank recently announced that it raised $350 million in green bonds. The issue was subscribed 3.14 times over, with prospective investors willing to pump in $1.1 billion. The proceeds of the issue will be used to provide debt finance to renewable energy projects. Renewable energy project developers have approached the bank for over $1 billion worth of debt finance. IDBI Bank also became a partner to the Climate Bonds Initiative. 

ANZ Bank, BNP Paribas, Citibank, HSBC, JP Morgan Chase, and Standard Chartered Bank acted as Joint Book Runners and Lead Managers for the green bonds issue.

The bank issued the green bonds to 60-70 investors at a coupon rate of 4.26% for a period of five years. While the coupon rate is at a premium of 255 basis points to five-year US Treasury rate but well below the base lending rate of 9.75% of the bank.

The bank has already provided debt finance worth $300 million to renewable energy projects, and plans to offer an additional $2 billion over the next 12 to 15 months. The bank has also committed to finance 3 GW of renewable energy projects during the international renewable energy investors summit held in New Delhi earlier this year.

This year saw the first green bond issue in India, and several public and private sector organisations have received tremendous response to green bond issues. Yes Bank was the first institution to issue green bonds. The Indian Import-Export Bank issued the first dollar denominated green bonds. CLP India, a wind energy project developer, issued project-linked green bonds. Several other institutions and banks, like Rural Electrification Corporation, Power Finance Corporation, and Indian Renewable Energy Development Agency, have lined up green bonds issues to finance renewable energy projects.