The Center is likely to kick off its first-ever issuance of green bonds strongly, with debt market participants expecting firm demand, said a report by Business Standard. As per the report, the encouraging response to the maiden sale may be reflected in a pricing premium or greenish relative to prevailing levels on corresponding regular government bonds.
The first tranche of sovereign green bonds is set to go to auction on Wednesday. A total of ₹8,000 crore worth of green bonds - ₹4,000 crore of 5-year green bonds and ₹4,000 crore of 10-year green bonds - would be on the block, said BS.
The government had announced the sale of green bonds as part of its market borrowing for the first time in the Union Budget for financial year 2023. The proceeds would be deployed in public sector projects in order to reduce the carbon footprint of the economy, said the report.
The central government would also auction ₹8,000 crore worth of green bonds on February 9, taking the total issuance to ₹16,000 crore for FY23, the report added.
The difference between regular sovereign bond auctions and green bond auctions is the premium - or the pricing benefit - that issuers globally enjoy for selling environment-friendly securities, the market daily pointed out.
"The (first) issue is going to sail through but, we don't think that there is going to be a very deep premium. What we expect is that it will sell at a richer price than a normal sovereign bond of the same maturity," Vijay Sharma, senior executive vice-president, PNB Gilts, was quoted as saying in the report.
The Center is likely to kick off its first-ever issuance of green bonds strongly, with debt market participants expecting firm demand, said a report by Business Standard. As per the report, the encouraging response to the maiden sale may be reflected in a pricing premium or greenish relative to prevailing levels on corresponding regular government bonds.
The first tranche of sovereign green bonds is set to go to auction on Wednesday. A total of ₹8,000 crore worth of green bonds - ₹4,000 crore of 5-year green bonds and ₹4,000 crore of 10-year green bonds - would be on the block, said BS.
The government had announced the sale of green bonds as part of its market borrowing for the first time in the Union Budget for financial year 2023. The proceeds would be deployed in public sector projects in order to reduce the carbon footprint of the economy, said the report.
The central government would also auction ₹8,000 crore worth of green bonds on February 9, taking the total issuance to ₹16,000 crore for FY23, the report added.
The difference between regular sovereign bond auctions and green bond auctions is the premium - or the pricing benefit - that issuers globally enjoy for selling environment-friendly securities, the market daily pointed out.
"The (first) issue is going to sail through but, we don't think that there is going to be a very deep premium. What we expect is that it will sell at a richer price than a normal sovereign bond of the same maturity," Vijay Sharma, senior executive vice-president, PNB Gilts, was quoted as saying in the report.
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