Environmentally conscious European investors flocked to the world’s first green Masala bond last week, raising hopes that the fledgling market for offshore rupee debt could play a major role in financing India’s renewable energy ambitions.
NTPC, India’s largest power company, priced Rs 2,000 crore ($299 million) of five-year bonds last Wednesday at a yield of 7.48 per cent. It is the third Indian company to issue so-called Masala bonds since HDFC opened the market last month, and the first to carry a green label.
The green certification gave NTPC a global boost and, as a result, better pricing. NTPC doubled HDFC’s international distribution, allocating 30 per cent of its Masala bonds to Europe versus HDFC’s 14 per cent. Notable was NTPC’s ability to lure dedicated green bond funds from Germany and Denmark into the deal.
Offshore US investors also participated in this issue through their offices in London and Singapore. Bankers said the green tag and NTPC’s state ownership both played a part in driving demand.
With NTPC illustrating the benefits of diversification, the offering is expected to pave the way for similar issues, especially as the country looks for new channels to finance India’s enormous green energy needs.
By Baishakhi Dutta
