The National Stock Exchange (NSE) has listed the first green bonds on its platform from Indore Municipal Corporation. Green bonds are debt securities designated to finance environment-friendly projects.
India’s municipal bond market is growing rapidly, with fund raising growing three-fold since 2017. Indore Municipal Corporation had filed for another round of ₹250 crore fund raising. It has raised ₹6,252 crore through this route, compared to ₹2,342 crore in 2017.
This shows that the government fixed-income market is back on investors’ radar. Yield on the benchmark 10-year government securities has risen to 7.4 per cent from a low 5.8 per cent in June 2020.
Municipal bonds provide an alternative means of financing for urban local bodies, reducing dependence on central and state grants. Most urban infra bonds may be categorised as green bonds given that proceeds are predominantly targeted towards energy, transport, water management, sewage treatment, energy saving and so on. Green municipal bonds will also bring in new foreign investors who specialise in sustainable financing for investment in projects with environmental, social and governance considerations, NSE said.
The public issue of Indore municipal bonds was subscribed 5.91 times the issue size.
The public issue of green bonds by IMC would give impetus to development of green financing and contribute towards India’s vision for transition towards a clean and green energy future, NSE said. The global green bond market is witnessing an exponential growth and crossed the $2-trillion mark in terms of cumulative green bond issuance, the exchange added.
India has also witnessed green bond issuances of about $10.8 billion during 2019-22 from corporates, PSUs and financial institutions, NSE said.