NABARD Launches Landmark INR 1040.50 Crore Social Bonds, Setting New Sustainable Finance Standard
Hyderabad: In a groundbreaking development, the National Bank for Agriculture and Rural Development (NABARD) has introduced its first-ever social bonds with a monumental value of Rs 1040.50 crore. This momentous move has solidified NABARD’s position as a pioneer in sustainable finance and marks a significant milestone in India’s financial landscape. These social bonds have secured the coveted AAA rating from both CRISIL Ltd and ICRA Ltd, making them the first externally certified AAA rated INR social bonds in the country.
The bonds were privately issued to eligible institutional investors on the 26th of September, between 10:30 AM and 11:30 AM. Investors can anticipate the listing of these bonds on the Bombay Stock Exchange (BSE) on September 29, 2023.
NABARD, India’s apex development financial institution, has been at the forefront of promoting sustainable development. The organization recently unveiled its Sustainability Bond Framework, designed to finance and refinance a range of green and social projects. Eligible social projects encompass affordable basic infrastructure, essential services access, affordable housing, employment generation, food security, socioeconomic advancement, and empowerment. Additionally, projects focusing on energy efficiency, such as green buildings, energy storage, and smart grids, will also have access to funding through these innovative bonds.
Investors in these social bonds will be required to hold them for a period of 5 years, with annual coupon payments. The redemption date for these bonds is set for September 27, 2028. Each bond carries a face value of Rs.1,00,000, with a base issue size of Rs. 1,000 crore. Importantly, there is an option to retain oversubscription up to Rs 2000 crore, potentially aggregating up to Rs. 3000 crore, reflecting the overwhelming response from institutional investors.
The arrangers for this historic bond issue are A.K. Capital Services Ltd., ICICI Securities Primary Dealership Ltd., and Trust Investment Advisors Private Limited.
NABARD’s social bonds have garnered immense interest among institutional investors, resulting in a staggering total of bids worth Rs 8590.50 crore. NABARD ultimately accepted Rs 1040.50 crore at a competitive coupon rate of 7.63%, underlining the strong demand and confidence in NABARD’s sustainable finance initiatives.
This landmark issuance of social bonds by NABARD reinforces its commitment to fostering sustainable development in India, offering investors a unique opportunity to support projects that address critical social and environmental challenges while securing competitive returns.