JSW Hydro Energy raises $707 million in debut 10-year green bond issue

Offer generates good response, closes at much lower rate than initially guided

JSW Hydro Energy’s debut green bond issue was subscribed 4x and closed at a much lower rate than initially guided, on Monday. 
 
Its $707-million 10-year green bond saw a fair amount of investor interest, even as foreign investors cut down their overall positions on Indian debt.
 
The initial price guidance was at 4.5 per cent but finally closed at 4.125 per cent, said market sources. Majority of subscribers are high-quality long-only investors, according to them.
 
Deutsche Bank was the 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 of Deutsche Bank.
 
Green bonds are called so 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 focus on environmental, social, and corporate governance or ESG lending, and companies are committing themselves to sustainable projects.
 
Till December 2020, Indian entities raised just $10 billion cumulatively from overseas markets in dollar green bonds. In 2021 so far, 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.