Indian Railways Begins Foreign Roadshows for Green Dollar Bonds

Indian Railway Finance Corporation will issue its first green dollar bond, and hold roadshows in Hong Kong, Singapore and London.


Indian Railway Finance Corporation (IRFC), the finance arm of the Indian Railways, is all set to start roadshows in Hong Kong, Singapore and London in order to obtain its first green dollar bonds.

IRFC has already obtained its pre-issuance Certification of Climate Bonds, and an inaugural green bond from IRFC on Nov. 30 will provide another boost to reach the $130 billion forecast for 2017. The roadshow will cover Hong Kong on Dec. 1 and London during Dec. 4-6.

“The roadshows for the Reg S bonds will continue till Monday and the issue is likely to be priced next week,” an investment banker was quoted as saying by the Financial Express. Reg S bonds are those in which investors from the United States do not participate.

The proceeds from this issuance will be used to finance green initiatives. This is the first time that the proceeds will be channelized for low carbon rail transport products.

The high demand for investors in green product and India’s potential for attracting international green capital is growing steadily. The green bonds issuance of IRFC is key for stirring further action along these lines and also for meeting national climate and development goals.

“Look at where the Indian market is going. Both large government backed corporations and public companies are seeking global capital, increasingly adopting best practice, issuing Certified green bonds and listing internationally. It’s a good foundation for growth,” Sean Kidney, the Chief Executive Officer of Climate Bonds Initiative, said in a statement.

This issuance also shows that the Indian Railways, the fourth largest railway network in the world, is committed to contributing in helping India meet its Nationally Determined Contributions — a Paris-based agreement where each country needs to outline its 2020 climate actions — and national development goals.

The issuance will boost some ongoing and planned efforts like electrification and energy efficiency measures of the IRFC.

The IRFC had hit the dollar bond market in February 2014 and was able to raise $500 million through a five-year paper at a coupon rate of 3.917 per cent, according to Bloomberg. “The spread on IRFC’s bonds will be tighter by at least 25-30 basis points compared to some of the other PSUs,” an investment banker was quoted as saying in the FE report.

Moody’s Investors Service has given a Baa2 rating to IRFC’s proposed green bonds, which makes the rating outlook stable.

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