Axis Bank, India's third-largest private bank, will be raising $500 million via green bonds to fund clean (renewable) energy projects. The Mumbai-based lender will be the fifth such entity to raise funds via green bonds.
The bonds were placed on Monday evening in the United States, Mint reported, citing two bankers.
"The initial pricing guidance for the Axis Bank issue is 175 basis points over the US Treasury note," the daily quoted one of the two bankers as saying.
Other issuers of green bonds in the recent past include Yes Bank, IDBI Bank and Exim Bank.
The Axis Bank stock was trading at Rs. 488.35, up 0.42 percent from its previous close.
Last November, the state-run IDBI Bank raised $350 million via green bonds, becoming the first public sector lender to do so. Asian investors accounted for about 82 percent of the allocation, with the balance going to European investors. The proceeds of the five-year bonds will be utilised to refinance clean energy projects in India, the bank had then said.
In February 2015, Yes Bank, another private sector bank, became the first entity to issue India's green bonds by raising about Rs. 1,000 crore, including a green shoe option of Rs. 500 crore.
The Mumbai-based lender raised $50 million via green bonds in August that year that also saw participation by International Finance Corporation, the private investment arm of World Bank. The bonds carried a tenor of 10 years.
"Green bonds have opened a new finance flow that will be essential to confronting climate change impact," Inessa Tolokonnikova, IFC's Financial Institutions Group Manager for South Asia, was quoted as saying by Yes Bank.
Green bonds have picked up momentum in the past few years and the amount outstanding in such bonds was $53 billion at the end of 2014, according to international consultancy KPMG.
Green bonds are debt instruments with a marked difference.
"The key difference between a 'green' bond and a regular bond is that the issuer publicly states it is raising capital to fund 'green' projects, assets or business activities with an environmental benefit, such as renewable energy, low carbon transport or forestry projects," KPMG said in a report titled, "Gearing up for green bonds."