The listing by Axis Bank, India’s third largest private sector bank, of a US$500 million (£384m) Certified Climate bond last month on the London Stock Exchange (LSE) represented a number of firsts and further reinforces the UK exchange’s position as the “preferred launch pad” for financial institutions seeking to mobilise resources through green bond issuance (Ethical Investment).
Attracting the lowest spread for a US dollar benchmark-sized bond issued by a private Indian bank since 2008, there was encouraging appetite shown by investors for the issue, with around 21% of the investor base being green investors (Ethical Investment).
Axis’ bond, certified by the Climate Bonds Standards Board, was the lowest coupon ever for such a 5-year bond and priced at US Treasuries plus 160 basis points (bps). Furthermore, it was the first ever US dollar green bond by an Indian private sector company and the first 144A green bond from India.
Sean Kidley, CEO of the Climate Bonds Initiative, commenting said: “Axis Bank has been an active lender to significant green projects and assets, including renewable energy, low-carbon transport and energy efficiency. This bond continues that direction”.
The bank intends to utilise proceeds from the bond issuance to promote green energy in rural and urban areas, transportation and what is described as “green-blue infrastructure” projects in India and abroad.
Within India itself, the Government of Gujarat in India’s westernmost state, as well as other stress have launched a “Solar Roof Top” green energy pilot that is attracting individual citizens’ attention.
The LSE has a robust track record of supporting green issuance on its markets since having welcomed the first green bond ever issued by a Chinese financial institution back in 2015. The Agricultural Bank of China issued Renminbi (RMB) and US dollar green bonds with a total value of US$1 billion in London.
To date, 31 green bonds are listed on the LSE including ones denominated in Rupees and RMB that combined in Rupees and RMB that combined have raised over US$7 bn. Six new green bonds have raised over US$2bn (£1.5bn) in 2016 alone.
(Ethical Performance Magazine, 2016)
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