MANILA — The Asian Development Bank (ADB) has raised 12.5 billion Indian rupees (about $150 million) through its largest local currency green bond issue to date.
The issue is structured as a 4-year currency-linked bond, with a bullet repayment at maturity and carrying a fixed interest rate of 6.72% per year.
The bond is denominated in Indian rupees but settled in United States dollars, with returns to investors indexed to the performance of the Indian currency. Such bond structures are popularly known as masala bonds in the Indian financial community.
The proceeds of the green bond will be deployed to finance ADB’s private sector renewable energy and green finance projects, which adhere to ADB’s priority for tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability.
“Sustainability is a key driver for international capital markets, and ADB is long established as a regular issuer of green bonds. The ability to finance climate change projects with local currency green bonds represents the apex of our ambition, while contributing to capital market development,” said ADB Treasurer Pierre Van Peteghem.
The bond is listed on the Luxembourg Stock Exchange. It was arranged by Standard Chartered Bank and was subscribed by a group of UK and US investors. Investors were drawn to the benchmark size for a local currency bond with a green theme backed by a multilateral development bank.
ADB has been a frequent borrower in the Indian rupee bond market, debuting in the domestic bond market in 2004 and completing multiple masala bond issues since 2014 to raise more than $1 billion equivalent.
The latest bond offering represents ADB’s return to the Indian rupee bond market after a 3-year hiatus. ADB issued its first local currency green bond in Indian rupees in 2017.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.