Green Bonds
In the previous article we read about basics of green bonds, background behind introduction of Sovereign Green Bonds(SGrBs) in India, salient features of the bond. In this article we shall read about flow of events with respect to SGrBs issue in India and recent updates.
Green bonds Issue: Flow of events/Issue details
Government of India, in consultation with RBI notifies the indicative calendar for issuance of Govt securities including SGrBs for every fiscal year.
FY 2023-24: Accordingly, on January 25 2023 GOI issued first ever sovereign green bond for a total value of Rs.16000 Crores in two tranches, one in January 2023 and another in February 2023. Main participants to the issue were domestic financial institutions and banks.
Results:
a) In the 1st ever sovereign green bonds auction made for total value of ₹8000 crores, held & announced by RBI in its official press release on 25 January 2023:
---> New GOI SGrB 2028 (5 year bond for ₹ 4000Crores ): They were oversubscribed by 3.4 times with a total of 96 bids and was allocated amongst 32 bidders with 7.1% annual yield.
---> New GOI SGrB 2033 (10 year bond) : oversubscribed by 4.8 times with total of 170 bidders and was allocated amongst 57 bidders with 7.29% annual yield. (source: RBI)
b) In the 2nd issue of sovereign green bonds auction for total value of ₹8000 crores held & announced by RBI in its official press release on 09 February 2023:
® 7.10% GOI SGrB 2028 (5 year bond for ₹ 4000Crores ): They were oversubscribed by 2.7 times with a total of 62 bids and was allocated amongst 24 bidders with 7.23% annual yield.
® 7.29% GOI SGrB 2033 (10 year bond for ₹ 4000Crores ): oversubscribed by 3.01 times with total of 91 bidders and was allocated amongst 24 bidders with 7.296% annual yield. (source: RBI)
These proceeds were allocated to the eligible schemes/projects of the Ministries/Departments such as New and Renewable Energy, Environment, Forests and Climate Change, Housing and Urban Affairs, Railways etc. (source: PIB)
FY 2024-25: As per Calendar for Issuance of GOI Dated Securities for the fiscal year 2024-25, two issues of 10 Year maturity SGrBs for a total value of Rs.12000 crore were scheduled to be issued, one during the period May 27-May 31, 2024 and subsequently in period July 29- August 2 2024 with value of Rs.6000 Crore each tranche.
Results:
a) RBI on May 31, 2024 cancels the first green auction for the financial year 2024-25 as traders refused to pay greenium.
News reports suggested bids were in range of 7 to 7.06% as against the benchmark bond yield of India's 10Yr bonds at 6.99% and consequently the auction was cancelled.
b) In the Second sovereign green bond auction for FY 24-25, held and results of which were declared on August 2, 2024 by RBI
New GOI SGrB 2034 (10 year bond for ₹ 6000Crores) : Subscription received from 87 bidders for 2 times the notified bid amount and but bid value of ₹ 1697 Crore could be accepted and allotted among 17 bidders with an annual yield of 6.897%(source: RBI)