India’s First Green Bond Sale To Command ‘Greenium’: Report

According to two government officials, the Indian government has identified 400 billion rupees ($4.92 billion) in projects that may be supported with the revenues and expects to issue its first green bonds at a ‘greenium,’ with yields below current market rates.

For the current fiscal year that ends on March 31, the government intends to raise 160 billion rupees through green bonds. The first tranche, worth 80 billion rupees, is slated for auction on Wednesday.

The money would go toward “green” initiatives that assist lower the carbon footprint of the economy, including solar, wind, and small hydropower projects.

A green premium, or “greenium,” on pricing is what the government anticipates will cause yields on sovereign bonds to drop 5–10 basis points (bps) as a result of the enthusiastic response and interest from both international and local investors.

The top 50 foreign portfolio investors (FPI) met with India’s Ministry of Finance in December, and at that meeting, investors expressed interest. Those with green mandates also inquired about domestic registration requirements, according to the sources.

The Reserve Bank of India (RBI) said on Monday that there would be no limits on FPI purchases of these securities.

An email from Reuters requesting comments received no response from the Ministry of Finance.

Priority and ratings are used to determine the categories in accordance with a universal framework.

According to the structure made public by the government in November, interest and principal payments on the bonds are not dependent on how well the projects function, and investors don’t take any risks associated with the projects.

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