Power Finance Corporation raises $400 mn via maiden green bond issue

State-owned Power Finance Corporation (PFC) has raised $400 million through its maiden green bond issue.

The funds will be used to promote renewable energy in the country.

"The bond issuance saw diverse participation from high quality investors across Asia and Europe. PFC has successfully priced this 10-year Reg S Green Bond at a fixed rate coupon of 3.75 per cent," a PFC statement said.

According to the statement, the pricing of this bond saw the tightest ever spread of 157.5 bps (basis points) over 10- year US Treasury by any Indian issuer for the inaugural 10- year transaction.

The bond is Climate Bonds Initiative certified and is being listed on the London Stock Exchange and the Singapore Stock Exchange.

During the last 3 years, PFC saw a significant jump in its renewable business, with loan disbursements growing five times. One of its objectives is to support renewable and sustainable energy-led expansion.

According to the company, the money raised will promote renewable energy and help achieve the government's target of 175 GW of green capacity by 2022.

PFC is the principal financier of Indian power sector funding the entire value chain.

This green bond also helps in PFC's strategy of diversifying its source of funding.

Additionally, PFC tapped the foreign currency syndicated loan market recently for raising USD 300 million.

PFC Chairman and MD Rajeev Sharma said, "Diversifying our funding sources remains a core component of PFC's fund raising strategy. This bond offering is one of the many issuances to come and PFC would look to regularly tap the offshore markets to diversify the borrowing portfolio and support its loan growth, going forward.