Axis Bank prices $500 mn maiden green bonds at 2.87 pc

Private sector lender Axis Bank said it has raised USD 500 million from global investors by selling its maiden green bonds.

The final pricing for the issue came in at 1.60 percent over the US treasury which was 0.15 percent lower than what was targeted by the bank, making it the lowest spread for a USD benchmark bond issue by a domestic bank since the Lehman crisis, the bank said in a statement.

"The encouraging response to our successful green bond issuance, attractively priced, is reflective of the realisation and recognition of the global need to encourage and support eco-friendly sustainable development," the bank's Deputy Managing Director V Srinivasan said.

The bonds got oversubscribed by 2.2 times, which prompted the bank to revise down the price, it said.

The bank is fourth domestic lender to have used this avenue of resource mobilisation. The first such sale was by its peer Yes Bank, which had raised Rs 1,000 crore through a rupee-denominated green bond issue in last February.

IDBI Bank and Exim Bank also hit the market with such an issue.

The money raised from such instruments has to be committed for financing green projects.

From a geographic perspective, Asia accounted for 48 percent of the investors, while 25 percent came from Europe, followed by Americans at 16 percent and Middle East investors constituted 11 percent, it said.

For some of the investors, this was a maiden subscription to an issue by an Indian investors, it said.

The notes are issued by Axis Bank's Dubai International Finance Centre branch and are rated Baa3 by Moody's, BBB- by S&P and BBB- by Fitch.

Notes will be denominated in US dollars and will bear fixed interest of 2.875 percent per annum, with interest payable semi-annually in arrears. The notes will mature in June 2021.

This is the first 'labelled climate bond initiative' certified bond issued by a bank from Asia and also the first Indian green bond to be listed on the London Stock Exchange.

"Axis Bank is a long standing and distinguished equity issuer on London Stock Exchange and has been an instrumental partner in the IFC's masala bond programme devoted to developing infrastructure in India," LSE Chief Executive Nikhil Rathi said.

The bank's Singapore branch, Bank of America-Merrill Lynch, Citi, Credit Agricole, HSBC, JP Morgan and Standard Chartered acted as joint book-runners and lead managers to the issue.