Greenko launched the new green bonds that are said to be too sophisticated for the market situations. However, CreditSights analyzed that the value is fair especially in the final price for around 5.39%. An India-focused banker agreed, the final price reflected trading fair value, especially during the greenfield project. This is because, in the past Greenko has experienced a tied price deal with another project that was already operational. People acknowledging the transaction said that the three-year bond for a full operational project can have the price at 5%.
This is for the better market.
The company also follows an offshore issuance structure that is quite famous in Indian renewable companies. The scheme allows the companies to skirt regulatory yield caps. It could also bring the proceeds back onshore to invest in rupee-denominated securities. The project is popular in the pumped hydro storage plant in Pinnapuram, Andhara Pradesh, the south-eastern state.
The above scheme will help Greenko refinance a Rs22bn of bridge loan and fund capital expenditure related to the project, noted IFR Asia. This time Greenko used a shorter tenor than usual. It is inline with the investors’ preference for three-year notes and borrowing needs. India-focused bankers argued that it could return the market for a longer-dated bond right after the project is completed. The company believed that it would gain a better price.
The company also focuses on doing onshore transactions rather than navigating business too much on U.S dollar bonds. It is possible if the company expects a longer tenor. However, the issuer commonly does not want to stay in a longer period for a high yield. The issuer generally expects pricing to decrease once the hydro project is done. India-focused bankers said that international investors would love to buy the deal without even questioning the project.
