Green infrastructure bonds

Bank of Baroda Achieves Milestone with Green Infrastructure Bonds

“The Green Infrastructure Bond issue marks a significant milestone for Bank of Baroda and a defining moment for India’s domestic ESG bond market,” stated Debadatta Chand, the bank’s managing director. This statement underscores the importance of the recent bond issuance, which raised ₹100 billion to support renewable energy and sustainable infrastructure projects.

The bonds, which carry a tenure of seven years and an interest rate of 7.1% per year, were issued through the National Stock Exchange’s Electronic Book Platform. The bond issue had a base size of ₹50 billion but attracted bids worth ₹164.15 billion, more than three times the base issue size.

Bank of Baroda has become the first Indian bank to issue long-term green infrastructure bonds locally, a significant step in promoting environmental, social, and governance (ESG) investments in the country. The proceeds from these bonds will be directed towards eligible green projects that align with the bank’s Green Financing Framework.

The bond issue consisted of a base size of ₹5,000 crore with a greenshoe option of another ₹5,000 crore, both of which were fully subscribed. Furthermore, the bonds have received ‘AAA’ ratings with a stable outlook from CARE Ratings and ICRA Limited, reflecting strong investor confidence.

Chand emphasized that, “The funds raised through the bond issue will support India’s infrastructure needs and green energy transition goals,” highlighting the dual focus on economic development and environmental sustainability.

This bond issuance follows Bank of Baroda’s introduction of the bob Green Hydrogen Financing Scheme, aimed at supporting green hydrogen production facilities for captive usage, further demonstrating the bank’s commitment to sustainable financing.

As the demand for green financing continues to rise, Bank of Baroda’s successful bond issue may set a precedent for other financial institutions in India, encouraging more investments in environmentally friendly projects.

With the growing emphasis on sustainability, the green infrastructure bonds represent a crucial step forward in addressing both the infrastructure needs and the urgent need for a transition to renewable energy sources in India.

Details remain unconfirmed regarding the specific projects that will be funded by the bond proceeds, but the bank’s commitment to green financing is clear.