The government on Wednesday sold its first sovereign green bonds worth Rs 8,000 crore at yields below comparable government bonds. The Reserve Bank of India auctioned Rs 4,000 crore of five-year bonds at a coupon rate of 7.1 percent and another Rs 4,000 crore of 10-year bonds at a 7.29 percent.
The yield on green bonds are five to six basis points below normal government securities.
The proceeds will be utilised for funding public sector projects seeking to reduce carbon emissions.
Another auction is scheduled to take place on February 9.
The government intends to mobilise Rs 16,000 crore from the issuance of green bonds during the second half of the current financial year. Finance Minister Nirmala Sitharaman in her Budget speech this year had announced that the government proposed to issue sovereign green bonds to mobilise resources for green infrastructure. "The proceeds will be deployed in public sector projects, which help in reducing the carbon intensity of the economy," she said during the Union Budget.
Green bonds are such financial instruments that generate proceeds for investment in environmentally-sustainable and climate-suitable projects.
