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Indian Railways: Debut $500m Climate Bonds Certified Green Bond Financing Low Carbon Transport Infrastructure

“We will be repeat green bond issuers” declares IRFC MD S.K. Pattanayak at LSE launch.

Third state backed entity from India to issue Certified green bonds in recent months.

First picture: S.K. Pattanayak (Managing Director IRFC). Second and third picture: S.K. Pattanayak (IRFC), Niraj Kumar (IRFC), Justine Leigh-Bell (Climate Bonds Initiative)


What’s it all about?

IRFC debuted a 10-year $500m Certified green issuance with an annual yield of 3.835% listing on the London Stock Exchange today. The bond will fund a series of low carbon improvements to network rolling stock and infrastructure for Indian Railways, the fourth largest rail network in the world.

This is the sixth green bond by an Indian issuer listed on London Stock Exchange. IRFC is the third state-backed entity to issue Climate Bonds Certified Green Bond in recent months following the renewable energy agency IREDA in September and Power Finance Corporation last week.

Standard Chartered Bank, Barclays PLC, and SBI Capital Markets acted as Joint Lead Managers and Joint Bookrunners on this issuance.

As of now, the majority (76%) of India’s green bonds use of proceeds has been allocated to energy projects, while transport has accounted for just 11%.


Who’s saying what?

S.K. Pattanayak Managing Director IRFC: 

“The interest our green issuance has elicited, especially in London, is very encouraging. And, we intend to tap this market with repeat green issuances.”

“We are the first certified green issuer for rail transport, outside of the developed world.”

“This is a benchmark for Indian Rail that puts sustainable, cleaner and safer transport for the public at the heart of its all-round growth and pursuit of excellence. We are committed to the goal of a low carbon pathway for the future. We hope this to be an example for others.”


Nikhil Rathi, CEO, London Stock Exchange plc:

“Today’s green bond listing is a significant milestone for India and IRFC, allowing the country to further tap a dynamic new international channel of finance for Indian infrastructure. In particular we are honoured to support the financing of the Indian Railways, the heartbeat of the Indian economy.”

“Today also re-enforces the progress being made in the Energy for Growth partnership established in April between the UK and India, strengthening London’s position as India's closest and most valued funding partner.”


Sean Kidney CEO, Climate Bonds Initiative:

"Indian Railways is the third state-backed entity to seek global exposure by issuing a Climate Bonds Certified green bond and listing in London."

“This IRFC green bond and the previous issuance from are a sign of the enormous market opportunities for available for international investors in green energy, transport, and infrastructure to meet India's intertwined climate, energy and development goals." 


More about this bond

Some further information from Standard Chartered:

The 10-year Green Fixed Rate Senior Unsecured Reg S only issuance achieved significant results:

  •  The first Certified green bond issuance by IRFC
  •  The tightest spread over US Treasury achieved by any Indian public sector undertaking (“PSU”) issuer for a 10-year transaction over the last decade
  •  The tightest spread over US Treasury achieved for any Indian Issuer for a 10 -year Reg S only transaction over the last decade

The transaction priced well inside the initial price guidance of CT10 + 165 bps area at CT10 + 145 bps, representing significant price tightening of 20 bps. The issuance was priced at a coupon of 3.835% for 10 Years (due 2027). This was IRFC’s first USD currency bond since February 2014.

Geographical diversification: Investors from  Asia (Singapore, HK, Taiwan, Tokyo), Europe (Denmark, UK, Germany, Switzerland) and Middle East. By Investor, Type Breakdown was 64% to Fund / Asset Managers, 24% to Insurance, 10% to Banks and Private Banks and 2% to Others. 


The Last Word – Growing a green India

Climate Bonds forecast on the 29th November of a pending Indian Railways Finance Corporation (IRFC) debut green bond has been realised and we couldn’t be happier.

Our analysis shows that green bonds to the value of $1.1bn were issued from India in 2015 and$1.5bn in 2016. A record $3.7bn has been issued as at 30 November 2017, more than double last year’s figure. 

This $500m IRFC green bond should stir further action.

India currently holds 10th position in the global rankings of national green bond issuers as at 30th November. We expect them to move up the Top 10 Table during 2018.

It’s a simple equation. International investment via both debt and equity is critical to India meeting its Paris NDC based climate objectives, ambitious clean energy targets, SDG based and national development goals.

Having the world’s fourth largest rail network in the second most populous nation issuing its first green bond gives perspective. 


'Till next time,

Climate Bonds


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