Indian Renewable Energy Development Agency Lists $300 Million Green Bond In London

The International Securities Market (ISM) in London finally listed the first Green Masala Bond, paving way for several other Indian companies and government agencies to follow suit.

The Indian Renewable Energy Development Agency (IREDA) listed an Indian rupee-denominated green bond (green masala bond) in London, raising Rs 19.5 billion ($300 million) in the process. The coupon rate, at 7.125%, on the five-year bond is highly attractive compared to international markets. The bond was also certified by the Climate Bonds Initiative.

This was the fourth green bond to be listed at the ISM by Indian companies or agencies. Axis Bank and NTPC Limited raised $500 million and $300 million, respectively in 2016 while government-owned Rural Electrification Corporation raised $450 million earlier this year.

The funds raised by IREDA through green bonds will be used for providing debt funding to renewable energy projects. The Agency plays a major role in financial aid disbursement for renewable energy projects on behalf of the Ministry of New & Renewable Energy.

India has been contemplating a renewable energy equity fund worth $2 billion. The Clean Energy Equity Fund (CEEF) will see contributions from the central government as well as some state-owned companies. Around $600 million will be contributed from the National Investment and Infrastructure Fund, under the Ministry of Finance, and the balance will be contributed by state-owned companies NTPC Limited, Rural Electrification Corporation and Indian Renewable Energy Development Agency (IREDA) — all three have already issued at least one green bond.

As India looks to maximize financial potential in the renewable energy sector to reach the ambitious target of 175 gigawatts of operational capacity by March 2022, it is looking to liquidate government share in companies like IREDA. In June, the government approved a proposal to launch an Initial Public Offering for IREDA.

IREDA also already announced that it will sanction loans worth Rs 13,000 crore ($2 billion) to renewable energy project developers between April 2017 and March 2018.