NSE Launches India’s first Sovereign Green Bond Indices

The two indices will be reviewed monthly


NSE Indices, National Stock Exchange’s (NSE) subsidiary, has launched India’s first Sovereign Green Bond indices, which will track the performance of Indian Sovereign Green Bonds issued by the government recently.

These indices – Nifty India Sovereign Green Bond Jan 2028 Index and Nifty India Sovereign Green Bond Jan 2033 Index – will have a maturity date of January 31, 2028, and January 31, 2033, respectively.

Both indices have a base date of January 27, 2023, and a base value of 1,000. The indices will be reviewed monthly.

The government completed the sale of its first-ever sovereign green bonds worth ₹160 billion (~$1.9 billion) in February this year in two tranches of equal amounts.

The yield on the five-year bond maturing in 2028 closed at 7.25%, and the 10-year bond maturing in 2033 closed at 7.34%. The Reserve Bank of India had set the cut-off yields at 7.23% and 7.29 % for the two bonds, respectively.

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

The government proposes to deploy the proceeds from the green bonds in public sector projects, which will help reduce the economy’s carbon intensity. It listed nine sectors, including climate change, sustainable water and waste management, clean transportation, renewable energy, and pollution control, that would benefit from the funds raised through green bonds.

Mukesh Agarwal, CEO of NSE Indices, said, “These indices are expected to act as a benchmark for asset managers and be a reference index tracked by passive funds in the form of Exchange Traded Funds (ETFs), index funds and structured products, which can provide fixed income investors efficient and cost-effective access to the Indian sovereign green bond market while making a positive impact on the society.”

Following the auction of the sovereign green bonds, the Indore Municipal Corporation also came out with a ₹2.44 billion (~$29.67 million) green bond issue in February. The bonds received an enthusiastic response from investors and raised over ₹3 billion (~$36.69 million).

The urban civic body intends to use the proceeds to fund a 60 MW ground-mounted captive solar photovoltaic project in the Khargone district in Madhya Pradesh.

Several corporate bodies have also been issuing green bonds to finance clean energy infrastructure projects, including solar and wind energy projects. After a review of the regulatory framework in the backdrop of increasing interest in sustainable finance in India and around the world, the market regulator Securities Exchange Board of India, recently issued a protocol for listing green debt securities.