In a first for an Indian company, CLP Wind Farms, the wind power portfolio of CLP India, on Tuesday said it has raised Rs 600 crore through the sale of green bonds to fund nearly 150 MW of wind projects and diversify the funding base from banks to debt market.
CLP Wind Farms has 724 MW of commissioned wind power projects while another 58 MW is likely to be commissioned by the end of this year. The proceeds of the green bonds issue will be used to replace the letter of credit the company had arranged for projects already commissioned or to be commissioned this year.
The bonds have been rated as AA by India Ratings and Research. The bonds, with a coupon of 9.15 % per annum being issued in three series of equal amounts, will mature every April in 2018, 2019 and 2020.
Standard Chartered Bank, IDFC and The Hongkong and Shanghai Banking Corporation are the lead arrangers for the bond issuance, the company said in a statement.
“Although, there is no pricing benefit attached to the green bonds currently as compared to other infrastructure bonds, going ahead, we will see pricing advantage to these renewable bonds with everything else remaining the same,” Samir Ashta, CFO, CLP India, told FE.
“The corporate structure of CLP Wind Farms, which has assets across six states, has managed to pool in the cash flow and security for lenders, thus mitigating the inherent risk of each project to a certain extent, enabling us to get the double A rating on the bonds,” Ashta added.
“There are several investors like International Finance Corporation (IFC) that have dedicated funds for green funds and they are looking to participate in India,” Jayen Shah, head – debt capital markets, Financial Markets Group, IDFC, told FE. Besides, he added, incremental offshore liquidity was also looking to invest in green bonds in the country.
So far, Yes Bank is the only issuer of domestic green bonds, while Export-Import Bank of India has issued such paper in the US dollar market.
In February, Yes Bank was the first to print Rs 1,000 crore of 10-year green bonds, priced at 8.85%. In August, the private lender raised another Rs 315 crore from 10-year green bonds at 8.95%. Rated AA+, the offering was sold entirely to International Finance Corp.
“In the five years prior to 2013, green bonds worth $19 billion were issued globally, but in 2013 alone, the number jumped to $32 billion. Although, it’s a nascent market, we hope there will soon be a pricing differential in the next one year,” Tarun Balram, MD, head of corporate finance, HSBC India, told FE. Hong Kong-based CLP Group is the ultimate parent of the issuer.