ADB issues green bond to support renewable energy in India

The Asian Development Bank (ADB) has raised INR3 billion (US$47 million), from a new issue of offshore Indian Rupee-linked bonds to help finance climate change mitigation and adaptation projects in India.

The bond issue carries a 6.00% interest rate with a 3.75-year maturity, falling due in February 2021.

The bonds, which are denominated in Indian rupees but settled in US dollars, were underwritten by JP Morgan and TD Securities as Joint Lead Managers. The bonds were placed 9% in Asia, 70% in Europe, and 21% in the Americas. By investor type, 48% of the bonds were placed with banks, and 52% with fund managers.

Proceeds from the bonds will be mobilized into ADB’s first cofinancing with the JICA LEAP Fund for the ReNew Clean Energy Project, a wind and solar power project across six states in India. India is ADB’s fourth largest shareholder and its largest borrower, excluding cofinancing. In 2016, ADB approved US$2.26 billion in sovereign loans and US$795 million in private sector projects in India, its largest market.

ADB is a regular borrower in the mainstream international bond markets but has also led issuance in developing Asian countries as part of efforts to promote domestic bond markets as an alternative to bank lending. ADB plans to raise up to US$30 billion from the capital markets in 2017.

ADB Treasurer Pierre Van Peteghem, said:

“Today’s fundraising represents ADB's maiden Indian Rupee green bond and shows the institution’s long term commitment to financial market development in India. In today’s markets, green bonds are an increasingly important source of financing for climate change projects and given ADB’s strong engagement in the capital markets of developing Asia, it is a natural next step for ADB to issue green bonds in local currency.”