India sells first green bonds at 5-6 basis points below sovereign yields


India sold its first sovereign worth a total of 80 billion rupees ($979.61 million) on Wednesday, at yields below comparable government bonds, the central bank said in a statement.

The auctioned 40 billion rupees of five-year bonds at a coupon rate of 7.10%, five basis points below the five-year sovereign yield. Another 40 billion rupees in 10-year bonds were sold at a 7.29%, six basis points below comparable government securities.

The proceeds would be used for ‘green’ projects such as solar power, wind and small hydro projects and other public sector projects that help reduce the economy’s carbon footprint.

Investors in these bonds do not bear project related risks, the government specified in its framework released in November.

A similar sized auction planned for February 9.

The five-year 7.38% 2027 bond yield was at 7.15%, while the benchmark 7.26% 2032 bond yield was at 7.35% during the time of bidding.

Ahead of Wednesday’s auction, the government had met foreign investors to gauge demand, and foreign investment restrictions on these securities were lifted, Reuters had reported.

($1 = 81.6650 Indian rupees)



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