Mumbai, Clean energy player Greenko today raised USD 500 million by selling green bonds to international investors, making it the first high yield or junk debt sale by a domestic firm.
The bonds, sold by Hyderabad-based Greenko Investment company, are backed by the parent Greenko Energy Holdings and are the first high yield corporate green bond issuance.
The Greenko Group is the largest clean energy independent power producer in the country with 1 GW of operating projects across hydro, wind and thermal segments and is majority owned (72 per cent) by the Singapore's sovereign wealth fund GIC.
The company, which is eyeing the India assets of the troubled US-based green power producer SunEdison, will be using the proceeds to retire a part of its costly debt and for other general corporate purposes.
The company could drive a hard bargain with investors as it could tighten the pricing by 50 bps from the initial guidance of 5.375 per cent to final yield of 4.875 per cent, thanks to huge response from international investors as the order book touched 8.4 times at USD 4.2 billion.
While the company could not be contacted, Deutsche Bank, one of the merchant bankers, said the transaction was designed on lines similar to Greenko's earlier bond issuance and benefited from sound structure, and a good parentage.
Other joint book-runners were JP Morgan, Morgan Stanley, UBS and Investec.
"The domestic high yield bond space, which was dormant since April 2015, is going through a turnaround currently. The attractive pricing of Greenko indicates that good quality paper will always attract global investors," Deutsche Bank
India's Corporate Finance head Amit Bordia said.
"In the past two months alone we have seen USD 1.3 billion of high yield papers getting printed from the country," he said.
Since the trade was well received, with the orderbook coming in at USD 4.2 billion, the company increased the issue size from USD 450 million to USD 500 million, he said.
The massive demand came in from 275 accounts from Asia (59 per cent), US (20 per cent), Europe/Asia (21 per cent) fund managers (89 per cent), public sector banks (8 per cent), insurers and private equity players (2 per cent) and the rest from others.
The 144A/Reg S six-year instrument carries B+ (stable) rating by S&P and Fitch, which is below investment grade, and called junk bonds. It can be redeemed after three, four, five and six years and will be listed on the Singapore Exchange.