Green Bond Sale: SBI raises $650 million

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State Bank of India raised a whopping $650 million through the issuance of green bonds. The money raised will be used to fund projects which are environment-friendly.

SBI-green-bonds
SBI raised a total of $650 million through the sale of green bonds.

This was the first tranche of the offering, with SBI aiming to raise a total of $3 billion in green bonds. These funds will provide capital to projects which adhere to the bank’s green bond framework.

According to a report by Firstpost, the green bonds (5-year money) are priced at the US Treasury plus 165 bps, which corresponds to 3 Libor plus 151 basis points.

Following the issue of these bonds, State Bank of India is expected to comply with global standards prescribed by CBI (Climate Bonds Initiative).

According to a report by Financial Express, in the last 2 years, domestic companies have managed to raise around $5 billion in green funds. While Yes Bank raised Rs.1,000 crore in green bonds in the year 2015, CLP India raised Rs.600 crore.

A total of 114 accounts participated in the sale. In terms of the kind of investors buying the bonds, banks purchased 41 per cent of the bonds, followed by fund managers, insurance companies, private banks, and public sector undertakings.

Entity type % of bonds purchased
Banks 41
Fund managers 30
Insurance companies 17
Private banks 8
Public sector undertakings 4

 

The bonds were issued through State Bank of India’s London branch and have a maturity period of 5 years.

SBI will also set up a Green Bond Committee which will determine whether a project is eligible under the framework. Some projects which could qualify under the green bond framework include those involving renewable energy, construction of low carbon buildings, projects which aim at controlling waste and pollution, sustainable transportation projects, etc.

Sources: Firstpost, Financial Express, Economic Times, SBI website.

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