Rural Electrification Corporation of India launches first Green Bond in London

  • $450m green bond part of REC’s $1 billion Medium Term Note programme
  • First green bond on London Stock Exchange’s new International Securities Market (ISM)
  • REC Chairman, Dr. P.V. Ramesh, opens London trading to celebrate the listing
  • Reinforces London’s status as a leading global financial centre

London Stock Exchange today welcomes Rural Electrification Corporation’s (REC) first green bond, which will be admitted to trading on London’s International Securities Market (ISM). The ten year dated green bond raised $450 million, with an annual yield of 3.965 per cent. The bond was 3.9 times oversubscribed on the final order book and secured strong international investor interest, with Asian investors making up 68 per cent of the order book and investors from the EMEA region making up 32 per cent.

The state-owned company, which finances and promotes power sector projects in India, will use the proceeds of the Climate Bonds Initiative certified green bond to finance environmentally friendly projects across India. One of its aims is to provide affordable and accessible power to most rural parts of the country by 2020. Some of the projects will include solar, wind and biomass assets, as well as sustainable water and waste management projects. The company, which is headquartered in New Delhi provides financial assistance to various State Power Utilities, Private Sector Project Developers, Central Power Sector Utilities and State Governments for investments in Power Generation, Power Transmission, Power Distribution, rural electrification projects and other system improvement initiatives.

 The Chairman of REC, Dr. P.V. Ramesh joined Nikhil Rathi, CEO of London Stock Exchange plc to open trading in London.

Nikhil Rathi, CEO, London Stock Exchange plc & Director of International Development, London Stock Exchange Group, said:
“We are honoured to welcome Dr. P.V. Ramesh, Chairman of REC, to London Stock Exchange today and warmly congratulate REC on its first green bond launch. The success of REC’s $450 million issuance is a significant achievement for REC, underlining the strength of international investor interest in building exposure to India’s green growth story.
“REC’s green bond launch reinforces London’s status as a market open to the world and a strong partner to India as it realises its ambitious green financing and infrastructure projects across the country. It is also an important milestone for our Group as REC is listing the first green bond on our International Securities Market.”

Dr. P.V. Ramesh, Chairman & Managing Director of Rural Electrification Corporation Limited (REC), said:
“The REC team is delighted to be welcomed to London Stock Exchange today in celebration of its green bond listing. The funds raised will help promote renewable energy projects all across India and aid in achieving our Government’s target of 175GW of installed renewable energy capacity by 2022. Through this issuance on London Stock Exchange, we will be also able to reach out to a new investor base.”

Sean Kidney, CEO and Co-founder of Climate Bonds Initiative, said:
“This certified bond will help bring green energy to rural Indian villagers, clean power to where it’s needed most. It’s another step towards the nations’ 2022 renewable energy target. Institutional investors backing long term carbon friendly projects is what we need to see replicated on a grand scale. Listing on London Stock Exchange gives exposure to global capital pools, an essential ingredient to reach India’s climate finance goals.”

The REC bond is ISM’s first green bond listing since the market launch in May this year. The launch of the new debt market was supported by India’s Minister of State for Power and Renewable Energy, Shri Piyush Goyal, who sees London as a long term partner for Indian firms looking to raise finance in the global capital markets. This reinforces London’s position as the world’s most international listing venue. ISM was launched to improve the effectiveness and competitiveness of the UK primary debt markets, offering greater choice for a variety of fixed income issuers. To find out more about ISM, visit: www.lseg.com/ism

London Stock Exchange has a strong track record of supporting green bond issuances by supranational, municipal and private company institutions on its markets. This is the third green bond by an Indian issuer on London Stock Exchange. Axis Bank and NTPC joined in 2016 raising respectively $500 million and $300 million equivalent. In 2015 London Stock Exchange launched its dedicated green bond segments creating strict admission criteria aligned with ICMA’s Green Bonds Principles. There are 45 green bonds listed in London that have raised $12 billion equivalent in seven different currencies.

Further information can be found online at London Stock Exchange Group’s Global Sustainable Investment Centre: www.lseg.com/sustainable  

REC’s green bond is the latest in a long line of global firsts for London Stock Exchange Group, including numerous high profile Indian and green bond issuances on London Stock Exchange:

  • LSEG is home to a number of global first green bond issuances from Bank of China and Agricultural Bank of China, India’s Axis Bank, Development Bank of Japan  and the IFC, a member of the World Bank Group
  • January 2017 – European Bank for Reconstruction & Development issues $62 million masala bond, the first in London and Europe in 2017
  • September 2016 - British Columbia issues world’s first Masala bond by a foreign government entity
  • August 2016 – NTPC, Indian energy conglomerate becomes first Indian green Masala bond issuer
  • July 2016 – HDFC lists world’s first Masala bond by an Indian corporate
  • June 2016 – Axis Bank lists India’s first internationally listed certified green bond & its entire $5 billion MTN programme
  • June 2016 - first Chinese sovereign RMB bond issued outside of China lists in London, bringing total number of offshore RMB bonds issued in 2016 alone in London to 54, more than all other offshore RMB markets combined
  • August 2015 - International Finance Corporation (IFC) issues world’s first offshore green Masala bond, raising $52 million equivalent
  • February 2014 – IFC lists first Rupee denominated bond, going on to issue a further 3  Masala bonds in London over 2 years

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