The Indian Renewable Energy Development Agency Limited (IREDA) garnered a strong investor demand when it priced on September 28 a 19.5-billion-rupee (US$300 million) green Masala bond at the lowest yield for any such issuance so far by an Indian issuer.

The Reg S five-year deal was priced at 99.572% with a coupon of 7.125% to offer a yield of 7.23%. It was the tightest five-year pricing for a Masala bond as it was printed 30bp inside the onshore curve for a Masala bond offering.

The transaction was launched during Asia open with an initial price guidance of the 7.30% area. The demand grew steadily and crossed the base issue size on the back of strong interest from key accounts from Asia and Europe. The order book peaked at around 34 billion rupees, supported by high quality global real money accounts, allowing the issuer to tighten the price guidance by 7bp.

The issuance, which attracted orders from 49 accounts, re-opened the Masala bond market after a brief hiatus post regulatory changes in June this year. The deal also paves the way for Indian financial institutions to tap the public Masala bond space for longer tenor notes.

In terms of geographical distribution, 66% of the bonds were distributed in Asia and 34% in Europe. By type of investors, fund managers and insurance companies accounted for 62%, banks 30% and private banks 8%.

The deal was the eighth benchmark size public issuance of Masala bonds from India and it was certified by Climate Bonds Initiative. Proceeds from the deal will be used for financing and refinancing of renewable energy and energy efficiency projects.

The offering features a change of control put at 100% if the Government of India will at any time cease to own, directly or indirectly, more than 50% of the voting securities of IREDA.

Axis Bank, Barclays, HSBC, ICICI Bank, Standard Chartered and YES Bank acted as the joint bookrunners and lead managers for the transaction.

IREDA is a non-banking financial company responsible for promoting, developing and extending financial assistance to renewable energy and energy efficiency projects in India and an entity under the administrative control of the ministry of new and renewable energy.