Mumbai The Reserve Bank of India on Friday announced that it will auction sovereign green bonds in two tranches. 8,000 crore each.
The proceeds from the auction, to be held on January 25 and February 9, will be channeled into public sector projects that help reduce the carbon intensity of the economy.
RBI will sell two bonds maturing in five years and 10 years 4,000 crore each – in both the auctions.
The bonds will be issued through a par value auction.
As per the auction calendar, 5% of the notified amount of the sale will be reserved for retail investors and will be eligible for repurchase transactions (repo).
These bonds will be treated as eligible investments for Statutory Liquidity Ratio (SLR) purposes.
“Some foreign investors who have ESG scheme etc may find it worthwhile to invest in these papers. Since it is a small quantity, it is bound to cross over. We will have to wait and see what kind of other categories of investors are participating. If the response from global funds/investors is good, it will fetch a decent price, otherwise it may get auctioned at current G-Sec levels,” said Ajay Manglunia, managing director, JM Financial.
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.
The government had released the Sovereign Green Bond Framework in November last year. A Green Finance Working Committee headed by Chief Economic Advisor V Ananth Nageswaran will select public sector projects for green financing submitted by government departments.
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