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entities have issued the green bonds in India, raising more than INR120 billion ($1.85 billion) so far: Yes Bank: Yes Bank – one of India’s largest private sector banks – issued its first green infrastructure bond in February 2015. The Eurodenominated INR10 billion ($161 million) 10-year issue received a AA+ rating and was oversubscribed by almost over two times, demonstrating a huge demand. The issue proceeds are being utilized to fund renewable energy infrastructure projects, including solar, wind, and biomass and hydropower projects. Yes Bank then issued another 10- year INR3.15 billion ($50 million) green bond in August 2015. The entire issue was subscribed by the International Finance Corporation (IFC), part of the World Bank Group. IFC then issued an AAA- rated “Green Masala Bond” on the London Stock Exchange for the same amount. This essentially capitalized the Yes Bank green bond and lowered the cost of lending to green projects. Proceeds from the offering will support a forthcoming infrastructure bond issuance by Axis Bank. The bonds are intended to increase foreign investment in India by mobilizing international capital markets to support infrastructure development in India. The projects to be funded by Yes Bank’s green bonds must meet the IFC green bond eligibility criteria, which leverages the development bank’s expertise in assessing green credentials and has a second opinion from Cicero, a leading financial services company. Export-Import Bank of India: Exim Bank issued India’sn first ever and Asia’s second dollar-denominated green bond in March 2015. The sale, initially aimed at $300 million, raised $500 million for a fiveyear green bond to international investors. The BBB- rated issue was oversubscribed by more than three times, attracting a total of $1.6 billion in bids. A majority of investors were asset managers, with banks and sovereign wealth funds with insurance companies accounting for the rest of the interested parties. The Exim Bank did not get an external green certification, but provided a series of detailed investor updates and assured audit certification of the use of proceeds. The issue proceeds are directed toward funding eligible green projects in Bangladesh and Sri Lanka. The Exim green issue followed close on the heels of a standard $500 million issue, but owing in part to the green angle, received very strong market response with no signs of investor fatigue. The issue priced at 147.5 basis points over benchmark US Treasury Bonds, for a coupon of 2.75%. CLP Wind Farms: CLP Wind Farms, the largest windn power developer in India with 1,000 MW of wind energy assets in the pipeline across 6 states, became the first Indian corporate (nonbank) issuer of green bonds in September 2015. CLP Wind Farms raised INR6 billion ($90.3 million), receiving an AA- rating and attracting primarily Indian mutual funds as investors. The bonds have been offered at a coupon of 9.15% per annum, in three equal tranches of INR200 crore ($30 million) and will mature every April in 2018, 2019 and 2020. The proceeds will be used both for capital expenditures and refinancing of wind assets. ReNew Power Ventures: ReNew Power Ventures, a leading Indian clean energy company, issued the second corporate green bond in the country, and the first to boast a credit-enhanced structure in September 2015.38 The proceeds of the INR4.51 billion ($68 million) green bond is intended to refinance bank loans for the company’s 85 megawatts (MW) wind power plant in Maharashtra. Asian Development Bank (ADB) and India Infrastructure Finance Company Ltd. (IIFCL) jointly guaranteed the bond, which matures in 17.5 years (in March 2033), to increase its credit rating from BBB to AA+ to draw more institutional investors to support this renewable infrastructure project. Hero Future Energies: Hero Future Energies, the greenn energy arm of the Hero Group, one of India’s leading industrial conglomerates, issued the country’s first certified climate bond in February 2016. Hero Future Energies raised INR3 billion ($44 million) by issuing nonconvertible debentures – certified by the Climate Bonds Standard – to finance the development of wind energy projects in the states of Madhya Pradesh, Telangana, and Andhra Pradesh with cumulative capacity of 521.5 MW. KPMG was appointed to assess the readiness of Hero Future Energies and if their proposed bond conformed with the requirements of the Climate Bonds Standard. IDBI Bank: India’s State-Owned IDBI Bank raised $350 million in BBB-rated 5-year green bonds for renewable energy projects in November 2015, becoming India’s first public-sector bank to raise funds through green bonds. The issue, certified through the Climate Bond Standard, was oversubscribed by over three times, with prospective investors offering a total of $1.1 billion. 82 percent of the investment came from Asia and the rest from Europe (18 percent). IREDA: In January 2016, IREDA issued a tax-free INR 10 billion ($150 million) green bond which was oversubscribed by over five times on the opening day. The tax-free bond offered retail investors up to 7.68 percent interest rate for tenures ranging between 10 and 20 years. Factoring in tax savings, the effective interest rate for investors is substantially higher than bank fixed deposits, which attract income tax on interest income. The IREDA green bond successfully reached a broad base of investors including retail individual investors, high net-worth individuals, and institutional buyers �� Source: Interim Report- Greening India’s Financial Market: How Green Bonds Can Drive Clean Energy Deployment from Natural Resources Defence Council, Council on Energy, Environment & Water and IREDA; April 2016 Green bonds currently fund renewable energy (38.3 percent), building and industry (27.5 percent), transport (10.2 percent), water (9.7 percent), waste management (6.2 percent), climate adaptation (4.3 percent), and agriculture and forestry (3.9 percent) RENEWABLE ENERGY 48 energetica INDIA · MAY | JUN16


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