India joins sovereign green-bond club with US$1b issuance
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
INDIA’S maiden sovereign green bond fetched a better-than-expected discount as the government took baby steps to raise funds for its transition to cleaner energy at affordable rates.
The 10-year green bond was priced at a coupon of 7.29 per cent, the Reserve Bank of India said on Wednesday (Jan 25). That is six basis points lower than the maturity sovereign debt, which is similar, and compares with the median estimate of 7.31 per cent in a Bloomberg survey.
The five-year bond was sold at a cut-off yield of 7.1 per cent. The estimate was 7.13 per cent.
The yield differential against conventional bonds reflects investors’ interest in financing India’s environmental projects. Prime Minister Narendra Modi aims to cut the country’s greenhouse emissions to zero by 2070, and the lower borrowing costs could help the government as it prepares for another year of record debt sales to support economic growth.
India, the world’s third-largest carbon polluter, needs to wean itself off coal, which powers the majority of its electricity plants. It also needs US$12.5 trillion in clean-energy investments by 2050, based on a BloombergNEF estimate.
Green-bond proceeds will be used for renewable-energy projects, as well as infrastructure to bolster the country’s resilience to extreme weather events.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
Indian companies already have more than US$26 billion in outstanding green debt – most of it US dollar-denominated – and the sovereign bond’s entry is expected to deepen the market.
While a similar offering on Feb 9 will take India’s green-bond sales to US$2 billion, that figure is only 1 per cent of the government’s overall borrowing this year. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
TRENDING NOW
Shelving S$5 billion office redevelopment plan proved ‘wise’ as geopolitical risks mount: OCBC chairman
Eurokars Group introduces rental car franchises Enterprise Rent-A-Car, National Car Rental, and Alamo to Singapore
20 photos that show how dramatically Singapore has changed in two decades
Singapore’s key exports up 15.3% in March from electronics surge, exceeding forecasts
