$1 Billion In Green Bonds Coming Soon From India

April 25th, 2016 by Saurabh Mahapatra 

Indian public sector companies could soon unleash a flurry of green bonds with a target to raise funding to expand the renewable energy infrastructure in the country.

The long list of Indian companies planning rupee-denominated green bonds include Power Finance Corporation, NTPC, Neyveli Lignite, PTC India, and Rural Electrification Corporation. The masala bonds (as rupee-denominated bonds are commonly referred) will be listed in the UK, possibly on the London Stock Exchange.

Piyush Goyal, Minister of Power, said that these bonds are likely to have small sizes of $150-200 million, and have tenors of 5 to 7 years.

India has set a target of having an installed renewable energy capacity of 175 GW by March 2022, including 100 GW of solar power and 75 GW of wind energy capacity. Understandably, such a huge target will require monumental funding efforts.

As a result, the Indian government has directed public sector companies to raise funds through green bonds. Indian companies can raise funding at very cheap rates compared to the prevailing interest rates in the country, despite the recent fall in rates.

Several Indian banks are also expected to raise funding through green bonds. The Ministry of New and Renewable Energy recently announced that Indian banks and non-banking financial institutions sanctioned Rs 71,200 crore (over $10 billion) as debt finance to renewable energy projects since February 2015. Most of this finance has been approved for solar power projects. Of the total amount sanctioned, Rs 29,500 crore ($4.4 billion) has already been disbursed.

Banks and financial institutions have committed to provide finance for 76,352 MW of renewable energy capacity. The total amount committed by the 40 participating entities was Rs 382,255 crore (US$57.2 billion).

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Source:Moneycontrol.com