Award for innovation - bond structure (green bond): Symbiotics

Symbiotics won the Award for innovation – bond structure for a second consecutive year, after an INR345 million ($4.6million) three-year green bond to support climate-smart agriculture was issued under a bond issuance programme it sponsors.

Symbiotics uses a special purpose vehicle (SPV) to help small firms in emerging and frontier markets to tap the green, social and sustainability bond market.

It is a passthrough entity set up in Luxembourg with its own Sustainable Bond Framework. This received a second party opinion from DNV GL in December 2019, helping to lower the cost of issuance.

The SPV enters into a loan agreement with the investee, typically a financial institution, whereby the funds for that specific loan are provided by investors via the sale of notes under a bond issuance. Each bond is linked to a single loan.

The agreement for this bond was with Sumunnati, which supports smallholder farmers in 18 Indian states. Symbiotics said the proceeds are used for a "three-year tenor, senior, local currency loan facility" to Sumunnati.

Its funds help underserved smallholder farms and agri-enterprises to access finance for three types of activities: food security, climate resilience, and greenhouse gas management. The funding portfolio includes climate resilient crops, climate-smart farm inputs and sustainable agriculture practices.

The bond tracks several impact report metrics including kilogrammes produced per year, organic fertiliser use, and the percentage reduction of water use.

Symbiotics said that, as the vast majority of issuers focus on hard currency bonds, it denominated the bond in rupees to help foster green finance in underdeveloped regions where growth is highest.

Costs for a mid-size private equity firm in India to access green bonds can often be high, so Symbiotics also offers tailor-made support along with the loan. It assists firms in identifying use of proceeds that fit with Symbiotics' smart agriculture strategy, creating impact reporting and developing acceptable policy.

Environmental Finance Bond Award judges were impressed that the "structure shifts further along the impact spectrum by incorporating stronger additionality features than many other green bonds coming to the market".

Symbiotics head of investments, Daniel Schriber, said: "We are proud to have won a second consecutive innovation green bond award from Environmental Finance. It comes as a testimony of the uniqueness of our bond issuance platform and its sustainable bond framework, which helps our partner financial institutions to develop green practices and pave the way for a bolder green impact."

Deal highlights

Issuer: A Symbiotics-sponsored bond issuance platform
Size: $4.6 million
Maturity: July 2024
Coupon: 9.08%
Use of proceeds: Development of climate-smart agriculture in India
External reviewer: DNV GL
Lead manager: Citigroup