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SAEL Debuts in International Bond Markets with USD 305 Million Green Bond

The USD 305 Mn green bond was jointly issued by SAEL Limited along with 5 wholly owned subsidiaries (Restricted Group).

July 26, 2024. By Abha Rustagi

SAEL group has successfully issued its debut US dollar-denominated bonds in the international markets. This bond marks the group’s first issuance in the international capital markets, providing the Company access to a deep, alternative pool of liquidity to complement funds available through domestic Indian lenders.

The USD 305 Mn green bond was jointly issued by SAEL Limited along with 5 wholly owned subsidiaries (Restricted Group). The Restricted Group comprises of 334 MW of renewable energy assets across solar and waste-to-energy. Notably, this is the first renewable energy issuance from India with waste-to-energy assets. The transaction was structured as a project-finance style security financing (including 100 percent share pledges and charge over all assets) with a cashflow waterfall mechanism.

The bonds were issued at a yield of 7.80 percent for a tenor of 7 years (weighted average life of ~5.3 years) and are expected to be rated BB+ by Fitch. This transaction marks a major milestone in the Company’s efforts to diversify its borrowing profile.

“This is an excellent outcome for us, as this has established our international capital market presence. We will continue to strengthen our position in capital markets with strong execution and operational performance,” said Laxit Awla, Chief Executive Officer, SAEL.

For this strategic fund-raising effort, the Company engaged in a global roadshow to meet with institutional debt investors across Asia, Europe, and the US over the past week. For the USD 305 million issue, the company witnessed a large demand from high-quality global investors. Despite the reduction in pricing by 32.5 bps from initial guidance, order books continued to grow to over USD 1.85 bn - implying an oversubscription of greater than six times.

A total of 139 investors participated in the final issuance, with 61 percent of the funds raised from Asia, 20 percent from EMEA, and 19 percent from the US. The deal attracted high-quality demand, with 88 percent of funds raised from asset managers, 7 percent from insurance companies and pension funds, and the remaining 5 percent from other investors such as financial institutions/banks, etc.

The green bond issuance received a second-party opinion from Sustainable Fitch, which rated the framework as 'excellent' (highest category). Proceeds are expected to be used for refinancing existing debt at the Restricted Group and fund capex of future renewable projects of the Company.

"The record orderbook oversubscription for SAEL’s debut issuance by more than 6x reaffirms the faith of investors in SAEL’s business model and the opportunities presented by the renewable industry. Backed by marquee partners such as Norfund and DFC, SAEL is the largest operator of waste-to-energy assets in India, and along with its solar capacity, it expects to expand its portfolio to 5 GW in the next 2 years" said Varun Gupta, Chief Investment Officer of SAEL.

Tags:

US dollar-denominated bonds

Renewable energy

Waste-to-energy assets

Solar energy

Project finance

Restricted Group