L&T May Issue Another ESG Bond After Successful ₹5,000 Cr Launch

India’s infrastructure giant Larsen & Toubro is making ESG bonds look cool—and profitable.

After a successful debut under India’s new ESG debt framework, L&T is already considering a second round. Why? Because the first one was a hit.

On June 19, the company raised ₹5 billion ($58 million) through its first ESG bond issue. The three-year notes carried a 6.35% coupon rate. That’s lower than the 6.45%-6.50% yields of similar L&T bonds in the market. Translation: they got cheaper funding. That’s a win.

A company spokesperson confirmed the positive outcome and said L&T is open to more ESG-linked issuances in the future—if the timing and market are right.

“We were able to achieve better pricing compared to our usual bonds. Strong investor interest in credible ESG-labelled instruments helped us,” the spokesperson told Reuters.

What Made This Bond Special?

For starters, this was the first issue under India’s new ESG debt rules. It also came with a AAA rating from Crisil, meaning it’s about as safe as bonds get.

Big players were interested. SBI Mutual Fund took the lead, anchoring the issue with a ₹750 million investment. Other banks and mutual funds followed. SBI MF didn’t respond to media inquiries, but their early entry speaks volumes.

Why ESG, Why Now?

ESG (Environmental, Social, Governance) is no longer just a buzzword—it’s a strategy. Companies like Larsen & Toubro are realizing that aligning with green goals isn’t just about goodwill—it’s about money. Cheaper capital. More investor trust. Better branding.

India’s capital markets are catching up fast. With clear regulations now in place, ESG bonds are set to become a key funding tool for companies that want to stand out.

What’s Next for Larsen & Toubro?

L&T isn’t rushing. But it’s clear that if another need arises, the ESG market is now a reliable option. The company is keeping its door open—and its options wider.