Investor demand drives stable 'greenium' for India's green bonds sale

New Delhi sold 50 billion rupees ($524 ⁠million) of 30-year sovereign green bonds, at a so-called greenium of four basis points on Friday, leading to an average premium of four bps ‌in the fiscal half-year, the highest since such sales began in the second half of fiscal 2023

Source

The Hindu — Business →

Quick Revision

Prelims-testable facts

01India's 50 billion rupees ($524 million) of 30-year sovereign green bonds were sold at a greenium of four basis points.
02The greenium for India's fiscal half-year was an average premium of four basis points, the highest since such sales began in the second half of fiscal 2023.
03The 30-year green bond sale was conducted by the New Delhi government.
04The green bond sale was part of India's evolving climate finance strategy.
05The Reserve Bank of India sold the 30-year green bond at a 7.50% coupon.
06India's 30-year green bond sale saw strong demand and a rare greenium, reflecting investor confidence in sustainable finance.
07The green bond sale highlights the growing importance of ESG investing in India.

Trap alerts

Most people think the greenium is a fixed rate, but actually it's a premium or discount on the market rate.
Most people think green bonds are only issued by the government, but actually they can be issued by companies and other entities as well.
Most people think green bonds are only used for climate change mitigation, but actually they can be used for a variety of environmental and social projects.

Current-affairs link

The Ministry of Finance has been actively promoting green bonds as a sustainable financing option, with the aim of mobilizing private sector investment in environmentally friendly projects.

Prelims Practice MCQs

Single facteasy

What was the amount in rupees that India sold of 30-year sovereign green bonds?

A.40 billion rupees
B.50 billion rupees
C.60 billion rupees
D.70 billion rupees

India sold 50 billion rupees of 30-year sovereign green bonds as part of its efforts to raise funds for green initiatives.

Statement I & IIhard

Consider the following two statements: Statement-I: The green bonds were sold at a so-called greenium of 4 basis points. Statement-II: The sale of green bonds is a sign of increasing investor appetite for green bonds. Which one of the following is correct in respect of the above statements?

A.Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
B.Both Statement-I and Statement-II are correct but Statement-II is not the correct explanation for Statement-I
C.Statement-I is correct but Statement-II is incorrect
D.Statement-I is incorrect but Statement-II is correct

The green bonds were sold at a so-called greenium of 4 basis points (Statement 1 is true). The sale of green bonds is a sign of increasing investor appetite for green bonds, which is reflected in the fact that the greenium is the highest since such sales began in the second half of fiscal 2023 (Statement 2 is true). Statement 2 explains why Statement 1 is true, as a high greenium indicates strong investor demand for green bonds.

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