Ireda raises $300-mn green masala bonds on LSE

The state-owned Indian Renewable Energy Development Agency (Ireda) became the first Indian financial institution to raise what are termed ‘green masala bonds’.

‘Masala’ bonds are issued abroad but denominated in rupees. ‘Green’ bonds are meant for financing projects seen as beneficial for the environment, such as Ireda’s for renewable energy. Ireda’s $300-million issue, on the London Stock Exchange, combined these and were subscribed 1.7 times. The coupon rate was 7.125 per cent; the initial offer was 7.23 per cent.

“We received bid offers of $500 million. This shows the enthusiasm of the investors in the India renewable energy space and trust in the Indian economy as well,” said K S Popli, chairman and managing director of Ireda.

The bonds would also be listed on the Singapore Stock Exchange. Speaking with Business Standard over the phone, Anand Kumar, secretary to the ministry of new and renewable energy, said the proceeds would help build ‘clean’ energy capacity.

“Ireda would now also finance transmission projects which include ‘green corridors’ for evacuation of renewable energy and storage solutions. We are confident that we’d be able to raise the $150 billion needed to build 175 Gw of renewable energy. The ministry will tap private investors, multilateral banks and innovative financial routes to raise money for growth of clean energy in India,” Kumar said.

Ireda had raised green bonds worth ~700 crore from the domestic market in March.

Kumar said the ministry would strengthen the manufacturing base for solar and wind energy. “We are confident that we will achieve the 175-Gw target by 2022. Rather, we can achieve 275 Gw. With the rapid changes in technology and falling tariffs (rates), renewable is becoming viable for power distribution companies. MNRE would also try to tap offshore wind energy soon,” he said. Among state sector companies, NTPC has raised green masala bonds of ~2,000 crore, at 7.25 per cent.