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Financial year 2024’s first issuance of sovereign green bonds (SGrB) sailed through on Friday, receiving decent investor interest.
The cut-off yield at the auction of the SGrBs of five year maturity came in at 7.25 per cent. The cut-off yield will be the coupon rate for the security.
Against the notified amount of ₹5,000 crore, the RBI, which is the banker and debt manager to the government, received 83 competitive bids aggregating ₹12,542 crore. The central bank accepted 43 bids aggregating ₹4,987.977 crore.
Under non-competitive bidding, five investors put in bids aggregating ₹12.023 crore. RBI accepted all bids.
Venkatakrishnan Srinivasan, Founder and Managing Partner, Rockfort Fincap LLP, observed that these bonds were issued at a marginal premium over the corresponding maturity G-Sec trading in the secondary market.
He said once India is included in JP Morgan’s Government Bond Index-Emerging Markets (GBI-EM), there will be lot of foreign portfolio investor interest in SGrBs.
The government plans to issue SGrBs in four tranches, aggregating ₹20,000 crore, in the second half of FY24.
In FY23, the government raised ₹16,000 crore via SGrBs in the second half.
Overall, the government mopped up ₹39,000 crore through auction of four securities -- New Government Security (GS) for ₹12,000 crore; 7.18 per cent GS 2037 for ₹10,000 crore; 7.25 per cent GS 2063 for ₹ 12,000 crore; and New GoI (Government of India) SGrB 2028 for ₹5,000 crore -- at the Friday weekly auction.
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