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India's first-ever green bond auction gets better-than-expected yield

The five-year bond was sold at a cut-off yield of 7.10% versus 7.13% estimate

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2 min read Last Updated : Jan 25 2023 | 2:57 PM IST

India’s maiden sovereign green bond issuance fetched a better-than-expected yield as the government takes baby steps to raise funds for its transition to cleaner energy at affordable rates.

The government sold 80 billion rupees ($1 billion) of securities, including 40 billion rupees each of 10-year and 5-year notes, the Reserve Bank of India said in a statement on Wednesday. The 10-year bond got priced at a coupon of 7.29%, six basis points lower than the similar maturity sovereign debt, and compared with 7.31% estimate in a Bloomberg survey.

The yield differential versus conventional bonds reflects investors’ interest in financing India’s environmental projects as Prime Minister Narendra Modi aims to zero out greenhouse emissions by 2070. The lower borrowing costs could help the government as it prepares for another year of record debt sales to support economic growth.