India Plans $3.3 Billion Sovereign Green Bond Issuance

(Bloomberg) -- India will issue at least 240 billion rupees ($3.3 billion) in sovereign green bonds as the country marks a shift towards a low-carbon economy, according to officials with knowledge of the matter.

The debut sale may take place in the first half of the fiscal year that starts on April 1, and a decision to sell more green debt will depend on the response to the initial issuance, the people said, requesting not to be identified as the information is private, said.

A finance ministry spokesman was not immediately available for a comment.

“If there’s a fitment to investor portfolio with a good risk return trade off then we will look at sovereign green bonds in every possible avenue,” said Chintan Haria, head of products and strategy at ICICI Prudential Asset Management Co, India’s third-largest asset manager.

Read: Sovereign Bond Plan Adds Momentum to Green Ramp-Up

The South Asian country’s maiden foray into the green bond space comes as it plans to fund renewable energy projects that will help meet its goal of net-zero emissions by 2070. 

The government is expecting lower yields on green bonds, as otherwise it sees little purpose in issuing them, the officials said. The yield on the 10-year sovereign bond closed at 6.85% on Monday.

If the bond carries a lower yield it “could be more attractive for foreign investors given their enhanced appetite for this category of bonds”, compared to local money managers, said Lakshmi Iyer, chief investment officer for fixed income at Kotak Asset Management Co.

The planned issuance comes amid a global boom in sustainable investments. India is the world’s third-biggest emitter of greenhouse gases and plans to more than quadruple its renewable power generation capacity by 2030.

Indian renewable energy companies raised debt worth 17.6 billion rupees in February, the most in nearly a year, data compiled by Bloomberg show.

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