India’s first sovereign green bond will go up for auction on Wednesday and the Indian government is expected to issue its first green bond on ‘Grenium’, with a yield lower than current market rates, and has raised 400 billion rupees (4.92 billion rupees) in projects. billion dollars) that could be funded with the proceeds, according to a Reuters report.
Government plans to raise Rs 160 billion green bond With the first tranche of 80 billion rupees set for auction on Wednesday for the current fiscal year ending March 31. The Reserve Bank of India (RBI) on Monday said that there will be no FPI restriction on these securities. The RBI will auction Rs 40 billion each of five-year and 10-year green bonds. The government five-year 7.38% 2027 bond yield and the benchmark 10-year bond yield stood at 7.16% and 7.35%, respectively.
The proceeds will be used for ‘green’ projects such as solar power, wind and small hydro projects and other public sector projects that help reduce the carbon footprint of the economy.
The offering will be sold through an identical price auction on January 25 in 5-year and 10-year tenors; A second, similar offering is scheduled for February 9. Its proceeds will be used for unspecified projects that align with India’s Green Bond framework.
The country does not have any domestic green-dedicated debt fund. “There is no ready mandate for domestic institutions to buy green bonds and there is a need to create awareness about it,” Naveen Singh, head of business at ICICI Securities Primary Dealership Ltd., told Bloomberg.
Indian companies typically issue green bonds in the offshore market, where demand has been strong. The recent $1 billion issue by the Export-Import Bank of India was oversubscribed by over 100%.
The central government had announced plans to issue sovereign green bonds in the FY2023 budget as India seeks to tap the domestic debt market to finance green infrastructure projects.
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