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IFC Issues First Green Masala Bond
August, 2015 - IFC issued a 5-year green Masala bond on the London Stock Exchange, the first green bond issued in the offshore rupee markets.
The bond raised 3.15 billion rupees for private sector investments that address climate change in India.
The IFC green Masala bond is issued under IFC’s $3 billion offshore rupee Masala bond program. Under the program, IFC has issued bonds worth over 103 billion rupees in a range of tenors, including a ten-year, 10 billion rupee-denominated bond that is the first Masala bond listed on the London Stock Exchange. IFC has also issued onshore Maharaja bonds under a $2.5 billion program for issuances in India’s domestic capital markets.
IFC will invest the proceeds of the bond in a green bond issued by Yes Bank, one of India’s largest commercial banks. Yes Bank will invest the proceeds of its bond in renewable energy and energy efficiency projects, mainly in the solar and wind sectors.
“Addressing climate change is a priority for IFC in India,” said Jingdong Hua, IFC Vice President and Treasurer. “IFC’s green Masala bond demonstrates the powerful role of capital markets in mobilizing savings for climate finance—and a listing in London allows us to attract the widest possible range of international investors. Adding the rupee as a new green bond currency also supports our goals to strengthen this important asset class.”
Rana Kapoor, Founder and CEO of Yes Bank said: “This first-ever investment by IFC in an Emerging Markets green bond further validates the tremendous commitment that global institutions have in YES BANK’s Responsible Banking ethos, and this transaction cements our bank’s status as a pioneer in Green Energy financing in India. This comes close on the heels of the highly successful issuance of India’s first ever Green Infrastructure Bonds of INR 1000 Crores (~ 100 mn pounds) by us in February 2015, and strengthens our conviction and resolve to come up with more innovative and effective structures to support the acceleration of Sustainable Energy Financing.”
Nikhil Rathi, Director of International Development, London Stock Exchange Group said: “This is an important day for London. As a world first, the successful issuance of this offshore green Masala bond on our markets highlights London’s ability to attract significant capital to both green projects and India, two of today’s most exciting investment opportunities. “In partnership with the UK Government, we are committed to establishing London as the leading centre for rupee denominated offshore capital raising and we look forward to further collaboration with IFC and Yes Bank, true leaders in green finance.”
IFC also is one of the earliest issuers of green bonds, launching a green bond program in 2010 to help catalyze the market and unlock investment for private sector projects that support renewable energy and energy efficiency. As of June 2015, IFC had issued $3.8 billion in green bonds, including two benchmark $1 billion issuances that were, at the time, the largest such issuances in the markets; and a 500 million renminbi-denominated green bond that was the first such issuance listed on the London Stock Exchange.