IBEF: March 30, 2020
State Bank of India (SBI), India’s largest lender, has raised US$ 100 million in green bonds through private placement.
According to SBI statement, “Continuing its commitment towards sustainable development, the bank raised US$ 100 million floating rate notes at a coupon rate of 80 basis points (bps) above the three-month Libor." These bonds will be issued through SBI’s London branch and shall be listed on Singapore Exchange (SGX).
Till now, bank has raised US$ 700 million through such bonds and this is the bank’s third iteration of green bonds.
Mr Rajnish Kumar, chairman, SBI said in a statement that he believes this issuance will reassure confidence in India’s strength in the international bond market.
“We at SBI have adopted the green bond framework with an objective to create a positive impact on the environment and this transaction is yet another step as part of our sustainability journey," said Mr Kumar.
Green bonds have been popular among Indian and global issuers. According to RBI, green bonds, carbon market instruments, and FinTech-based green funds are now at the forefront of climate change financing.
“The market for green bonds has issuers from more than 50 countries, including multilateral institutions like the World Bank. During 2007-2018, cumulative issuances of green bonds worldwide has been US$ 521 billion, with India ranking second among emerging market economies (EMEs) in these issuances (Climate Bonds Initiative, 2019)," the central bank said in its Report on Trends and Progress of Banking in India in December 2019.
Contribution from supranational institutions have increased, with the International Monetary Fund (IMF) already incorporating the same into its multilateral and bilateral surveillance.
“In September 2019, the Bank for International Settlements (BIS) launched an open-ended US dollar denominated fund for central bank investments in green bonds aimed at management of their forex reserves and to support the deepening of the green-bond market," RBI added.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.