Government-owned infrastructure finance company REC has issued green bonds worth $750 million under its $7 billion Global Medium Term Note Program.

The bonds carry an interest of 5.625% and will mature on April 11, 2028. The principal and interest payments will be made in U.S. dollars.

REC said in a bourse filing that the net proceeds from the bonds will be used to finance green energy infrastructure projects in accordance with the REC Limited Green Finance Framework and the External Commercial Borrowings guidelines of the Reserve Bank of India.

The green bonds will be listed on Global Securities Market of India International Exchange (India INX) and NSE IFSC.

REC’s business involves financing projects in the power sector value chain of generation, transmission and distribution. It funds state distribution companies, central and state power utilities, independent power producers, rural electric cooperatives and private companies.

In its Green Finance Framework document, REC has said it has been consistently improving its renewable energy portfolio and financed nearly 16.5 GW of capacity as of December 31, 2022.

During financial year 2021-22, the company approved disbursed loans for 15 renewable energy projects with a total generation capacity of about 1.6 GW. During the nine months ended December 31, 2022, it approved loans towards 20 renewable energy projects with a cumulative generation capacity of about 5.9 GW.

Projects eligible for finance/refinance under the framework include, solar, wind, bioenergy, hydroelectric, green hydrogen, energy storage, and waste-to-energy.

The framework explicitly excludes coal and gas-fired generation projects.

Green bond issuances by government agencies have seen an uptick in recent months. In February, the government completed the sale of ₹160 billion (~$1.9 billion) worth of sovereign green bonds in two equal tranches.

In the same month, the Indore Municipal Corporation also came out with a ₹2.44 billion (~$29.7 green bond the proceeds of which will be used to fund a 60 MW ground-mounted captive solar photovoltaic project in the Khargone district in Madhya Pradesh.

In the backdrop of increasing interest in sustainable finance in India, market regulator Securities Exchange Board of India issued a protocol for listing green debt securities after a review of the existing regulatory framework. Under the protocol, green debt issuers will have to make additional disclosures outlining environmental sustainability objectives, and alignment with international green standards and certifications.