“Green bonds are an increasingly important source of financing for climate change projects,” said Pierre Van Peteghem, treasurer for the ADB. “It is a natural next step for ADB to issue green bonds in a local currency.”
The Manila-based development lender will use the proceeds to provide financing for the ReNew Clean Energy Project, under which solar arrays and wind farms will be built throughout the South Asian nation. The ADB will finance the installations in cooperation with the JICA LEAP Fund, a joint infrastructure investment fund set up last year in cooperation with the Japan International Cooperation Agency (JICA). Indian power producer ReNew Power Ventures — which is backed by Goldman Sachs and the Abu Dhabi Investment Authority (ADIA) — will develop the projects in the Indian states of Andhra Pradesh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh and Telangana.
The rupee-linked green bonds — which carry a 6.00% interest rate and a 3.75-year maturity, due in February 2021 — are denominated in rupees but settled in US dollars. JP Morgan and TD Securities underwrote the issuance as joint lead managers. About 70% were placed in Europe, followed by 21% in the Americas and 9% in Asia, according to an online statement. Roughly half were placed with banks, and half with fund managers.
JICA has contributed $1.5 billion to the JICA LEAP Fund, which is managed by the ADB. LEAP focuses on investments in private-sector infrastructure projects, with a particular emphasis on renewable energy and energy efficiency.
Tokyo-based Jera, a joint venture under Japanese utilities Tokyo Electric Power (Tepco) and Chubu Electric Power, bought a 10% equity stake in Gurgaon-based ReNew Power in February for $200 million. In January, the Indian IPP secured $390 million in multilateral financing from the LEAP fund to build 398 MW of PV capacity in the Indian states of Jharkhand and Telangana.
The ADB approved $2.26 billion of sovereign loans and $795 million of financing for private-sector projects in India in 2016. In April of this year, it provided a $175 million loan to Power Grid Corporation of India Limited (PGCIL), for investments in the country’s grid infrastructure.