HDFC raises $300 mn in debut sustainable bond for EV

13 Feb 2024 CW Team

HDFC Bank has successfully raised $300 million in its inaugural sustainable bond issuance, earmarking the proceeds for the financing of electric vehicles and green loans. The three-year bond, carrying a spread of 95 basis points over the US treasury, is part of a broader initiative to secure $750 million through Regulation S bonds.

The bank specified that the remaining $450 million has been acquired for a five-year term with a spread exceeding 108 basis points over the US Treasury. These bonds are set to be listed on the Indian International Stock Exchange (India NIX) within the GIFT International Financial Services Centre (IFSC).

Arup Rakshit, the group head of treasury at HDFC, emphasised, "The funds raised through the sustainable finance bonds will be prioritised for lending towards electric vehicles, Small and Medium Enterprises, and affordable housing. We are strongly committed to building a green and social portfolio even as we continue adhering to the Bank?s risk philosophy."

HDFC Bank enlisted the support of Barclays, BofA Securities, JP Morgan, MUFG, and Standard Chartered Bank as joint global coordinators and lead managers for this initiative. Notably, the bank asserts that these represent the most competitive credit spreads achieved by an Indian issuer for a three-year sustainable bond and a five-year senior unsecured bond of comparable size within the US dollar Regulation S issuance.

This development follows HDFC's receipt of a $400 million loan from the International Finance Corporation in December 2022, aimed at enhancing climate-smart, affordable, and green housing initiatives in India. Additionally, HDFC subscribed to India's inaugural sovereign green bonds issue during the same year.

In a parallel effort, last August, ICICI Bank extended loans totalling $6.7 billion to support sustainability and renewable energy sectors, encompassing electric vehicles and green-certified real estate, for the fiscal year 2023.

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