Having State Bank Carmichael coal exposure?

4 minute read

We make the case for State Bank of India (SBI) refinancing of the bank's significant USD near term maturities to be conditional on no Carmichael loan, and review parallel lending practices in order to win green bond mandates, with specific focus on SBI's 2018 green bond syndicate by HSBC among others.

SBI is facing redemptions/maturities of USD 3.85bn of hard currency bonds and loans in the next 14 months. This constitutes around 50% of the bank’s hard-currency debt. SBI is also looking to potentially lend USD650mn to the Carmichael coal project in the near future.

In general, syndicate banks’ parallel and/or conditional general purpose lending should be weighed in by end investors when considering investing in a green bond. Refinancing of the upcoming maturities will potentially generate funds to be on-lent to the Carmichael coal mine development. This should exclude some financial institutions’ participation.