A government-owned company has become the latest entity in India to raise funds through a green bond issue. The bond issue is among the several such issues planned by government-owned and private entities in the country to raise funds for renewable energy and energy efficiency project finance.
According to media reports, Power Finance Corporation has managed to raise $400 million through a green bond issue which is now listed at London Stock Exchange’s International Securities Market. The bonds were offered at a semi-annual rate to 3.75% for a period of 10 years.
The green bond issue is part of PFC’s $1 billion medium-term note program launched in 2012. The funds raised by the PFC through green bonds will be used to provide debt funding to renewable energy and energy efficiency projects that are identified under its Green Bond Framework which, in turn, is based on the Green Bond Principles.
A number of Indian public sector companies and entities have come forward with green bond issues over the last few months. The intent is to provide low-cost finance to renewable energy projects that enable the country to achieve its ambitious target of 175 gigawatts operational renewable energy capacity by March 2022.
The Rural Electrification Corporation (REC) raised $450 million through a green bond issue earlier this year. The government-owned finance company offered the bonds at an annual yield of 3.365% for a period of 10 years.
The Indian Renewable Energy Development Agency (IREDA) also raised Rs 700 crore ($109 million) through masala (Indian rupee-denominated) green bonds earlier this year. The Agency is expected to offer two more green bond issues to raise an additional $350 million.
Apart from PFC, REC, and IREDA, several other government-owned entities are expected to launch green bonds soon. These companies have a green nod from the Indian government to raise as much as $1 billion through green bonds. Some of the companies which may float green bonds in the near future are Power Grid Corporation of India, Solar Energy Corporation of India, and Energy Efficiency Services Limited.