India’s largest bank — State Bank of India — is reportedly planning to launch several green bond issues to raise a total of $3 billion.
According to media reports, the government-owned State Bank of India will target international investors in an attempt to raise around $3 billion. The bank has received internal approvals and may be working with the Climate Bonds Initiative to issue several green bonds.
In February 2017 the bank issued a request for proposal to contract an approved assurance service provider which is a precondition to receive approval from the Climate Bonds Initiative. It subsequently hired consulting firm KPMG to assist it in the process.
“KPMG will be enable SBI to come up with green bond issues that are in sync with global requirements,” a senior SBI official said. “They will help with assessing that SBI chooses projects that are eligible to receive funds under climate change norms, and provide support during the pre-issuance phase through its reports.”
The bonds will be issued in foreign currency and could very well be listed at the London Stock Exchange, a practice now prevalent with several Indian institutions that launch green bonds. State Bank of India, despite being the largest bank and a leading lender to renewable energy projects in India, has joined the green bonds party little late. Private banks in India like Yes Bank and Axis Bank have already issued several tranches of green bonds targeting international investors. Additionally, government-owned Export Import Bank of India was the first one to issue green bonds in India.
Earlier this year, Greenko Energy Holdings, one of the largest IPPs operating in the renewable energy sector in India, floated the largest green bond in Asia, raising $1 billion. Funds raised through the bond issue will be used to refinance debt raised in 2014 as well as to retire debt that it inherited along with the acquisition of SunEdison India’s assets. Greenko’s competitors, like ReNew Power Ventures, Azure Power, and CLP India, have also raised funds through green bonds.
Several state-owned companies in India’s power sector have lined up green bond issues.
NTPC, Neyveli Lignite Corporation, Power Finance Corporation, Power Trading Corporation, and Rural Electrification Corporation are likely to float green bond issues worth $1 billion (INR 6,400 crore). These rupee-denominated bonds, also called Masala Bonds, will be listed on the London Stock Exchange. The tenor of these bonds is likely to be limited to a band of five to seven years and these are going to be in smaller denominations ranging from $150-250 million.