SBI raises $650 million in maiden green bond sale

The money is raised through the bank's London branch, the source added.

With this issue SBI will become compliant with the global standards as prescribed by the Climate Bonds Initiative, a global not-for-profit investor-focused organisation.

According to Bank of America-Merrill Lynch, the domestic green bond market has a $125-billion opportunity by 2025. It expects around USD 32 billion of such bonds being sold over the next five years.

Over the past two years, domestic companies have raised $6 billion in green bond sales, led by Exim Bank, Yes Bank, Axis Bank and green power player Renew Power.

It can be noted that mid-sized private sector lender Yes Bank was the first domestic bank to raise Rs 1,000 crore in green bond in 2015, followed by CLP India for Rs 600 crore for its wind portfolio.

Hero Future Energies raised Rs 300 crore, and Axis Bank had raised USD 500 million.

SBI had last year said it had an internal approval to raise around $3 billion in green bonds to finance green projects that do not emit toxic elements in accordance with the bank's green bond framework.

International rating agency Fitch has assigned the proposed senior unsecured debt an expected rating of BBB-.The banking behemoth has reportedly appointed seven investment bankers the sale, including SBI Cap, Citi, and Bank of America among others, according to market sources.

Of late globally, green bonds have become popular, with sustainability emerging as the key metrics in deciding both financing commitments as well as the fate of several development projects.

Green bond offerings has hit a record $155 billion in 2017, according to industry reports and in the first half it has already touched $80 billion, with around $15 billion sold in June alone.

The government has set an ambitious target of building 175 gw of renewable energy capacity by 2022, up from just over 30 gw now, involving $200 billion in funding.