India Bond House: Axis Bank

IFR Asia Awards 2021
3 min read
Krishna Merchant

At the forefront

As the pace of issuance picked up in India, Axis Bank stepped to the forefront to develop the market in areas like ESG, as well as breaking new ground offshore.

Axis Bank, the first Indian lender to set up a standalone ESG committee at the board level in 2021, was one of the arrangers of the Rs12.37bn (US$166m) three-year debut green rupee bonds issued by Vector Green Energy (VGC).

The bank helped VGC, which owns and operates 652 megawatts of solar and wind projects across India, raise funds in the domestic market at attractive rates. This showed that the onshore market could be a viable option for renewable power companies, which have usually tended to issue offshore through special purpose vehicles.

The offering revived domestic ESG issuance after a lull in the past three years, and paved the way for more renewable deals in the rupee market.

Axis Bank raised a total of Rs200bn for non-bank lender HDFC as sole arranger across three, five and 10-year floating-rate tranches at competitive rates, as well as bringing maiden rupee deals from issuers like telecom tower operator Summit Digitel Infrastructure and wireless provider Bharti Hexacom.

It also helped public sector banks facing bond calls raise Additional Tier 1 debt, despite stringent valuation and investment rules imposed on mutual funds’ investments in capital instruments. Axis Bank was joint arranger for the Rs20bn AT1 deals from Bank of Baroda and Punjab National Bank, and a total of Rs30bn issued by Canara Bank in the last quarter of 2021.

The bank was sole arranger for the first Masala AT1 in October, delivering tight pricing. HDFC Bank’s Rs7.39bn unrated perpetual non-call five-year issue priced at 7.55%, inside State Bank of India’s 7.72% AT1s.

Axis Bank itself sold its first offshore AT1 deal, bringing an ESG element to Indian bank capital. Its sustainable US$600m 144A/Reg S perpetual non-call five-year AT1 deal priced at 4.1%, with Axis Bank acting as a joint global coordinator. While hedging costs meant the lender paid a premium compared to the rupee market, it was able to raise an amount that would be impossible onshore.

As the only Indian house with a dedicated offshore DCM desk, Axis Bank was joint bookrunner for JSW Steel’s US$1bn dual-tranche offering, which included a sustainability-linked bond, as well as for a US$300m debut SLB issued by Adani Electricity Mumbai. It was also a joint global coordinator for the US$750m three-year green bonds issued by Adani Green Energy.

Domestically, Axis Bank topped the rupee league tables with a market share of 22.7% and league table volume of Rs693bn across 104 issues, in a year when domestic private placements dropped 33% to Rs5.93trn.

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