In the ever-changing world of sustainable finance, green Bonds are the only Bonds that have emerged as a compelling financial instrument that encourages positive environmental impact. The Government of India is taking proactive measures to curb the fiscal Deficit of India. Resulting in Green Bonds being introduced as a financial tool for funding environmentally beneficial projects.
In this Blog, we will deeply understand What are green Bonds, their types, the list of Green Bonds, and their significance.
What are Green Bonds?
Green Bonds are debt instruments that are issued to fund initiatives related to the environment like eco-friendly agriculture projects, renewable energy projects, clean transportation projects, and other environmental infrastructure projects. Investors who wish to support the environment through any means can invest in green Bonds, which will make our country a more sustainable and eco-friendly economy.
Latest news of Green Bonds in 2024
India Infrastructure Finance Company Ltd (IIFCL) is gearing up to raise Rs 2,000 crore through its inaugural green bonds over the next half-year to support sustainable projects. The funding strategy may involve a combination of both domestic and foreign issuances, contingent upon the cost of funds. In a similar vein, the State Bank of India (SBI) recently secured $250 million (approximately Rs 2,000 crore) by issuing green bonds with a maturity date set for 2028 through private placement. Since 2015, numerous Indian businesses and the government have actively advocated for and facilitated lending and financing through green bonds.
The heightened interest in green bonds prompted the Government of India to introduce a Green Bond Framework in 2022, subsequently releasing the initial tranche of its inaugural sovereign green bond valued at Rs 80 billion (equivalent to $980 million). Furthering this commitment, on February 9, 2023, the government announced plans for an additional issuance of Rs 80 billion ($968 million) in sovereign green bonds.
India’s financial and fiscal environment is experiencing swift and transformative shifts, propelled by the government’s proactive initiatives to control the nation’s fiscal deficit. A notable achievement in this transformation is the inception of green bonds, serving as a creative financing tool for projects that bring about environmental benefits.
Types of Green Bonds in India
1. Green Revenue Bonds – These bonds are typically issued by governmental entities, including state, central governments, or municipal bodies. In this arrangement, a dedicated cash flow, such as toll receipts or excise duty, is offered as collateral to investors.
2. Green Project Bonds – These Bonds are focused primarily on financing, particularly environmentally friendly projects in order to provide investors with a direct link to the success and outcomes of this kind of initiative.
3. Green Security Bonds – These securities are offered to the investors for multiple smaller qualifying green projects. And it also offers the investor great potential for diversification through the combined cash flows of various projects.
List of Green Bonds in India 2024
| Sr. No. | Issuer | Date of Issue | Date of Maturity | Amount (Rs. In crs.) | Coupon (%) | Tenure | ISINs |
|---|---|---|---|---|---|---|---|
| 1 | L&T Infrastructure Finance Company Ltd | 29/06/2017 | 18/11/2024 | 667 | 7.59% | 7.39 | INE691I07DZ9 |
| 2 | Indian Renewable Energy Development Agency Limited | 03/01/2019 | 03/01/2029 | 275 | 8.51% | 10.01 | INE202E07260 |
| 3 | Indian Renewable Energy Development Agency Limited | 17/01/2019 | 17/01/2029 | 590 | 8.47% | 10.01 | INE202E07278 |
| 4 | Ghaziabad Nagar Nigam | 31/03/2021 | 06/04/2025 | 150 | 8.10% | 4.02 | INE0GVF24014 |
| 06/04/2026 | 5.02 | INE0GVF24022 | |||||
| 06/04/2027 | 6.02 | INE0GVF24030 | |||||
| 06/04/2028 | 7.02 | INE0GVF24048 | |||||
| 06/04/2029 | 8.02 | INE0GVF24055 | |||||
| 06/04/2030 | 9.02 | INE0GVF24063 | |||||
| 06/04/2031 | 10.02 | INE0GVF24071 | |||||
| 5 | Yarrow Infrastructure Private Limited | 01/07/2021 | 01/07/2024 | 581 | 6.49% | 3 | INE001W07011 |
| 6 | Priapus Infrastructure Limited | 01/07/2021 | 01/07/2024 | 16 | 6.49% | 3 | INE964M07011 |
| 7 | Rattanindia Solar 2 Private Limited | 01/07/2021 | 01/07/2024 | 227 | 6.49% | 3 | INE935V07012 |
| 8 | Malwa Solar Power Generation Private Limited | 01/07/2021 | 01/07/2024 | 197 | 6.49% | 3 | INE999X07014 |
| 9 | Citra Real Estate Limited | 01/07/2021 | 01/07/2024 | 19 | 6.49% | 3 | INE969M07010 |
| 10 | Sepset Constructions Limited | 01/07/2021 | 01/07/2024 | 197 | 6.49% | 3 | INE961M07017 |
| 11 | Fermi Solarfarms Private Limited | 28/02/2022 | 28/02/2025 | 337 | 6.75% | 3 | INE404X07015 |
| 12 | Clean Sustainable Energy Private Limited | 28/02/2022 | 28/02/2025 | 334 | 6.75% | 3 | INE00JT07017 |
| 13 | Avaada Sataramh Private Limited | 28/02/2022 | 28/02/2025 | 270 | 6.75% | 3 | INE0CSU07013 |
| 14 | Avaada Solarise Energy Private Limited | 28/02/2022 | 28/02/2025 | 499 | 6.75% | 3 | INE07H107012 |
| 15 | Indore Municipal Corporation | 20/02/2023 | 20/02/2026 | 244 | 8.15% | 3 | INE00QS24019 |
| 20/02/2028 | 5 | INE00QS24043 | |||||
| 20/02/2030 | 7 | INE00QS24027 | |||||
| 20/02/2032 | 9 | INE00QS24035 | |||||
| 16 | Mindspace Business Parks Reit | 15/03/2023 | 13/04/2026 | 550 | 8.02% | 3.09 | INE0CCU07074 |
| TOTAL | 5333 |
Benefits of Green Bonds
1. Environmental Influence – The significance of green bonds lies in their crucial contribution to financing initiatives that promote a future characterized by sustainability and environmental friendliness, encompassing projects like renewable energy infrastructure and efforts towards clean transportation.
2. Financial Gains – Investors engaging in green bonds not only play a part in fostering positive environmental impact but also have the potential for financial profit. The green bond market has shown competitive returns, drawing an increasing number of investors committed to environmental considerations.
3. Corporate Accountability – The issuers of green bonds bolster their corporate reputation by demonstrating a dedication to environmental responsibility. This not only appeals to investors but also has the potential to positively shape consumer attitudes.
4. Market Reach and Liquidity – Green bonds frequently experience heightened interest from investors in search of socially responsible investment options, resulting in improved liquidity and market accessibility for issuers.
Conclusion
In today’s complicated financial world, green bonds offer hope for a greener future. By understanding the different types, the careful listing process, and the big benefits they bring, both investors and issuers can help make the world more eco-friendly and resilient. Exploring green bonds isn’t just about money, it’s a group effort to take care of the environment and invest responsibly.
Apart from investing in bonds, one can also consider to invest in small cap funds. Read here to know more about small cap funds.
