Axis Bank joins green finance rush with first ESG bonds in India

Axis bank ESG bonds

Axis Bank has raised $600 million from offshore investors by selling sustainable additional tier-1 (AT1) bonds at a coupon of 4.1 percent said.

The bank will be using the proceeds towards eligible green and social project categories, as per the term sheet. The bonds will be listed on bourses, including NSE IFSC and India INX IFSC.

The lender launched the issue of the perpetual bonds earlier in the day with the initial pricing guidance at 4.4 percent, looking to raise up to USD 1 billion.

Axis Bank raised USD 600 million from its GIFT City branch. The issue saw the order book peaking at USD 2.3 billion, as per the sources.

The major investors in the issue included Bluebay, Blackrock, Fidelity and HSBC Asset Management Company, they said.

This was only the third environment, social and governanc-themed bond issue by any lender globally and the first one in India.

The Axis Bank bonds were rated Baa3 (negative) by Moody’s Investors Service, BB+ (stable) by Standard & Poor’s and BB+ (negative) by Fitch Ratings.

HSBC deposits

Last month UK-based Hong Kong and Shanghai Banking Corp (HSBC) has raised $400 million of green deposits in India and identified financing opportunities to use those funds. Under its strategy, the bank first finds avenues to finance before raising the resources. The loans are extended for renewable projects, biodiversity-linked initiatives, clean transportation, and pollution control. Once the loans are sanctioned they are matched with deposits.

HDFC issue

HDFC, India’s largest private-sector mortgage financier, too announced last month the launch of a new green deposit plan to attract environmentally conscious depositors.
The company plans to raise these deposits from individuals to lend to projects by retail borrowers.
It plans to use these funds to lend to standalone homes which use environment-friendly practices, like putting up solar panels and water recycling, or even to women borrowers or self-help groups.

AT1 bonds

The bank is the third lender in quick succession to raise money from the AT1 route after HDFC Bank raised USD 1 billion from overseas investors last month, and SBI raised Rs 4,000 crore earlier in the day from domestic investors.
The AT1 capital instrument had received a setback after Yes Bank’s investors lost over Rs 8,400 crore of bets after a write-off in the RBI-led bailout.

Source: Economic Times

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