Green bonds: Green in demand: DIAL, Hero Future raise $810 mn at cheaper rate
Environment Social Governance (ESG), with a pronounced accent on sustainability, dovetails neatly into the triple bottom-line goals that both corporations and investors are seeking to achieve, especially in the aftermath of the pandemic.
PIMCO, Nomura, Blackrock, China Asset Management, Eastspring, Ashmore, and Pictet-Geneva are said to be among the bidders, market sources told ET. Individual investors and issuers could not be contacted immediately.
Clean Renewable Power (Mauritius), a wholly owned subsidiary of Hero Future Energies Asia, raised $363 million, for which the company received over $2 billion bids until evening.
These papers offered 4.25 percent with six-year maturity, which is 50 basis points lower than the initial price guidance at the time of opening the issuance for subscription. Higher demand for papers resulted in tighter pricing.
Hero Future Energies, the parent company, will stand as a guarantor to the offshore bonds. Moody’s and Fitch graded the bonds with Ba2 and BB- rank with stable outlook.
“Clean Renewable Power will use the proceeds from the USD notes with a partial amortizing debt structure to extend six-year external commercial borrowings (ECBs) to a newly formed restricted group (RG) comprising eight subsidiaries,” said Moody’s Investors Service.
“The restricted subsidiaries, in turn, will use the INR proceeds to repay all their outstanding external debt and inter corporate loans, as well as for general corporate purposes,” it said.
Barclays, JP Morgan, HSBC, Standard Chartered, Deutsche Bank, Citi, Credit Suisse are among others investment bankers that helped the two companies launch the bond sales overseas.
Cliffton Ltd, an orphan special purpose vehicle of DIAL, raised about $450 million, an amount that was higher than the initial target size. Global rating companies marked the issuance Ba3 (Moody’s) and BB (Fitch), with a negative outlook. Those bonds likely yielded 6.25 percent, with 4.7 years maturity. The offer was supposed to be 25 basis points lower than initial price guidance.
Until evening, the company obtained subscriptions worth about $1.5 billion, market sources said.
“DIAL will use the majority of the net proceeds to refinance its existing bonds and the balance towards capex investment in eligible green assets,” Fitch said in a note.
Proceeds of the notes will principally be used to subscribe to rupee-denominated bonds to be issued to DIAL, which in turn will use the proceeds of the those rupee papers to refinance its USD bonds maturing in February, 2022 and for capital expenditure.
