According to reports, CLP India, one of the largest foreign investors in the Indian power sector, today announced the issuance of corporate Green Bonds for its wind portfolio – CLP Wind Farms. CLP Wind Farms will raise Rs 600 crore through issue of rated, secured, unlisted, redeemable non-convertible debentures.
CLP is the largest wind power developer in India with committed wind projects of more than 1,000 MW, spread across six states. The proceeds from these bonds will be used for funding the capital expenditure of its projects in the renewable space. CLP Wind Farms is the first mover to issue Corporate Green Bonds in the Indian power sector. This move will help CLP sustain its expansion of the renewable energy portfolio in alignment with the company’s vision to lower carbon emission footprint.
India Ratings and Research Private Limited has assigned a rating of AA to the bonds. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations and very low credit risk. The bonds, with a coupon of 9.15 per cent per annum being issued in three series of equal amounts, will mature every April in 2018, 2019 and 2020. Standard Chartered Bank, IDFC Limited and The Hongkong and Shanghai Banking Corporation Limited are the lead arrangers for the bond issuance.
Rajiv Mishra, Managing Director, CLP India, said, “Through the issuance of these bonds we plan to fund the expenditure of new projects in the renewable energy space and thereby support CLP’s growth plans for India. There is enormous potential in the Indian renewable power market and we see ourselves making a vital contribution towards the government’s objective of increasing capacities in clean energy.”
Samir Ashta, Director – Finance and Chief Financial Officer, CLP India, said, “We were the first to introduce asset specific bonds in the Indian power sector for our Jhajjar power plant earlier this year. The issuance of the Corporate Green Bonds by CLP Wind Farms has set a benchmark for re-financing of power projects, post commissioning. At CLP India, we always think of innovative financial structures to improve the overall project viability.”
Speaking to Business Standard, Ashta said the company has a varied debt portfolio which includes bank loans, external commercial borrowings and bonds. Unlike loans where the interest cost is revised, bonds have an advantage of fixed rate of interest, he said.
According to him, the structure of these bonds achieves the twin objectives of accessing long term funds at competitive rates and an attractive long term investment opportunity for the investors. It is also beneficial from the company’s perspective to keep its interest cost in check as the interest outgo towards repayment remains fixed and is not variable as in the case of bank borrowing. ”
Green bonds enable capital-raising and investment for projects with environmental benefits. These could include projects related to renewable energy, energy efficiency, sustainable waste management, sustainable land use, biodiversity conservation, clean transportation, sustainable water management, climate change adaptation, among others.