• Banking / Finance

India Exim Bank Opens Indian Markets with a Benchmark-sized Sustainability Bond

• Prashant Kapadia
• January 11, 2023

by Prashant Kapadia/NHN

India Exim Bank has successfully issued a 10-year Sustainability Bond of US$ 1 bn in the 144A/Reg-S format on January 10, 2023, under its Environmental Social Governance (ESG) Framework. This issuance makes India Exim Bank the first Indian issuer to open the markets for dollar and sustainability bond issuances in 2023. On the back of a strong start to the year and a constructive market, India Exim Bank capitalised on the strong demand, with an intraday execution and initial price guidance tightening of 30 bps to end at CT10+190 bps, inside of its secondaries and at par with the fair value point on the curve.

In terms of geographic distribution, the bonds were well distributed, with 39% in EMEA region, 32% in APAC and 29% from the USA. In terms of distribution, the bonds were distributed to high quality investors with around 70% distributed to fund and asset managers, 12% to Banks, and 10% to Sovereign Wealth Funds. Followed by insurance/pension corporations, private banks and others.

Barclays, Citigroup, HSBC, J.P. Morgan, MUFG, Standard Chartered and Bank of America acted as Joint Lead Managers and book runners for the offering. India Exim Bank has been rated as ‘Baa3 (Stable)’ by Moody’s, ‘BBB- (Stable) by S&P and ‘BBB- (Stable)’ by Fitch, same as the rating of Government of India.

Speaking on the occasion, Ms. Harsha Bangari, Managing Director of India Exim Bank, said, “We are delighted to open the debt markets for Indian issuers with our maiden benchmark-sized sustainability bond under our ESG Framework. This issuance makes India Exim Bank the largest ever single tranche IG ESG issuer out of India. This USD 1 bn issuance is testimony to our commitment towards sustainable financing both in India and partner developing countries, and to align ourselves with the global best practices.”

“India Exim Bank has been continuously monitoring the market for a possible issuance window. The quasi-sovereign nature of the Bank, EMBIG index eligibility of the bonds, and the commitment towards sustainable financing garnered significant interest from marquee investors, with a peak orderbook of 3.7X. Given the swift build to the book and the large book size, we elected to move quickly to achieve a significant price tightening by 30 bps from the initial guidance”, added Shri Tarun Sharma, Chief Financial Officer, India Exim Bank.

The net proceeds of Sustainability Bond will be used towards eligible projects under the Bank’s ESG Framework that are aligned to select Green and Social categories in Framework, including renewable energy; clean transportation; access to essential services and basic infrastructure; affordable housing; and sustainable water and wastewater management. The annual reporting of the use of proceeds under the Sustainability Bond would be subject to External Verification.

India Exim Bank has consistently worked towards enhancing its ESG initiatives, along with transparency and communication with its stakeholders. The Bank has in place an ESG Framework, to issue green, social, or sustainable bond / loans. Further, the Bank also strengthened its Board-approved ESG Policy – ‘Environment, Social and Governance Policy of the Bank for Sustainable Development / Responsible Financing’ last year.

India Exim Bank has pioneered the market, in its commitment towards sustainable financing. India Exim Bank’s 2033 Sustainability Bond effectively reopened the G3 market for Indian issuers after nine months since last issuance in March 2022. Further, the Bank had also launched India’s first USD-denominated 5-year Reg-S Green Bond in March 2015. This was also the first benchmark-sized Green bond out of Asia in that year, which matured in April 2020. In 2019, the Bank issued its first ever USD-denominated Socially Responsible Bond.