Government Completes Sale of Maiden ₹160 Billion Sovereign Green Bonds

RBI will issue guidelines on sustainable finance in a phased manner

February 10, 2023


The government completed the sale of ₹160 billion (~$1.9 billion) worth of sovereign green bonds, with the second tranche raising ₹80 billion (~$970 million) on Thursday.

Like in the first tranche, the second tranche comprised ₹40 billion (~$485.56 million) worth of bonds with a five-year tenor and a like amount of bonds with a ten-year tenor.

The yield on the five-year bond closed at 7.25%, and the 10-year bond closed at 7.34%. The Reserve Bank of India (RBI) had set the cut-off yields at 7.23% and 7.29 % for the two bonds, respectively.

The first tranche of India’s debut sovereign green bonds worth ₹80 billion (~$970 million) were auctioned on January 25, 2023. The first installment yielded a slightly higher premium than the second one.

In its half-yearly report on government finances, the RBI had said it would issue the green bonds in the last quarter of the current fiscal year 2022-23. The government has said the bond proceeds would fund ‘green’ projects in the public sector to reduce the economy’s carbon intensity.

Meanwhile, the green bond to be issued by the Indore Municipal Corporation to raise ₹2.45 billion (~$29.5 million) for a 60 MW ground-mounted captive solar photovoltaic project in Madhya Pradesh will go on sale on February 10. The issue will close on February 14. The tenor of the green municipal bonds will be for 3, 5, 7, and 9 years with a coupon rate of 8.25%.

This week, the central bank said that it recognizes that climate change can translate into climate-related financial risks for regulated entities which can have broader financial stability implications. To prepare a strategy based on global best practices for mitigating the adverse impacts of climate change, it circulated a discussion paper on climate risk and sustainable finance for public comments last year.

Based on the analysis of the feedback received, RBI said it would issue guidelines for regulated entities on the following in a phased manner:

  • Broad framework for acceptance of green deposits
  • Disclosure framework on climate-related financial risks
  • Guidance on climate scenario analysis and stress testing

Further, the Reserve Bank will have a dedicated webpage on its website to consolidate all instructions, press releases, publications, speeches, and related communication on climate risk and sustainable finance.