IREDA will extend guarantees of up to 25% of a bonds proposed issue size, as per the most recent audited balance sheet. According to a government proposal, IREDA seeks to provide credit enhancement via an unconditional, irrevocable guarantee for part of the total amount.
The program will be made available to developers of grid-connected solar and wind projects, with stringent guidelines in place to filter defaulters and poor performers. According to sources within IREDA, the agency wants to stabilize the Indian market for renewable energy bonds, which could result in the availability of funds at lower borrowing rates.
Bond issuance could achieve greater stability in the market, by creating a simpler way to borrow. Borrowing in the current environment in India can be complicated, says Mercom Capital CEO Raj Prabhu, the process can involve getting a buyers credit, then a line of credit followed by domestic borrowing and refinancing after a couple of years in operation.
IREDAs official also added that the agency expects to increase its profits with the move, as the market for bonds in the renewable energy sector is growing steadily.
The guidelines stipulate that bond proceeds should have a debt to equity ratio not higher than 3:1, and that the minimum issue size should be no less than Rs. 1 billion (US$15.08 million) to be included in the program. Projects must also have a debt service coverage ratio of 1.2 and a credit rating no lower than BBB to be eligible. Bonds can last for a maximum of 15 years.
Mercom Capitals India Quarterly Report shows that financial institutions have allotted roughly Rs. 788 billion (US$11 billion) to fund clean energy, Rs. 335 billion of which has been released. Both public and private sector organizations have already committed to financing 76.3 GW of renewable energy projects over 5 years.
Popular content
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
Share
Mark Hutchins
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.