JSW Hydro Energy raises $707 million in debut 10-year green bond issue
JSW Hydro Energy’s debut green bond issue was oversubscribed four times and closed on Monday at a much lower rate than initially guided.
The company’s $707 million, 10-year green bond saw considerable interest, even as foreign investors are overall cutting down their positions on Indian debt.
The initial price guidance was at 4.5 per cent but it finally closed at 4.125 per cent, sources said. Majority of subscribers are high-quality long-only investors, according to the sources.
Deutsche Bank was lead banker on the issue. Other banks included Standard Chartered, JP Morgan and Barclays.
‘The extremely strong response to the issue, especially in the current environment, is testament to the quality of the issuer and the confidence that overseas investors continue to repose in high-quality issuances out of India,’ said Amrish Baliga, managing director, Deutsche Bank.
Green bonds are so called because the funds raised are used for sustainable projects. In 2021, green bond issuances have seen a huge spurt compared to the past few years despite the pandemic. Most of the foreign funds are focusing on environmental, social, and corporate governance (ESG) lending, and companies are committing themselves to sustainable projects.
Till December 2020, Indian companies raised just about $10 billion cumulatively from overseas markets in dollar green bonds. But in 2021 so far, the issuances from India have easily crossed $5 billion and more issuance would be coming.
If a bond or fund is certified “green”, it brings down the cost by almost half a percentage point. However, in the domestic market investors do not yet distinguish much between a normal bond and a green bond because of the lack of green standards, say bankers.
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