State-owned companies buy more than half of India’s first green bond issue: traders

On Wednesday, New Delhi raised 80 billion rupees (about $981 million) through five-year and 10-year green bonds. He plans to use the proceeds from this mission for “green” projects, such as solar power, wind power, and others, that help reduce the carbon footprint of the economy.

“We have seen good demand from public banks and insurance companies, with the latter taking a quarter of the offers today,” said a senior Treasury official at a public bank, who requested anonymity because the information is not public.

The Life Insurance Corporation of India was “an active participant and could have bid around Rs 20-25 billion. Public banks must have offered a similar amount,” the official added.

The operators added that the purchase of the large public insurer was concentrated in the 10-year paper, while the public banks distributed their purchases between the two titles on offer.

The Reserve Bank of India sold Rs 40 billion of 5-year 7.10% coupon bonds and a similar amount of 10-year 7.29% coupon bonds. The bonds yielded 5 to 6 basis points below comparable government securities.

The offers received were worth more than three times the amount of the five-year bond and almost five times that of the 10-year note. The five-year bond was sold to 32 investors and the 10-year bond to 57 investors, according to central bank data.

Traders said that in addition to state players, there was some interest from private banks, as well as private insurance players.

The insurers’ request comes after the industry regulator said earlier this month that insurers will be able to classify their sovereign green bond purchases as infrastructure investments.

Meanwhile, the participation of foreign investors has been limited, as confirmed by operators of two foreign banks and two main distributors.

Foreign investors generally prefer to invest in dollar-denominated bonds for their green mandates and this could be one of the reasons for their lower participation in the sale.

Prior to the bond sale, the RBI had lifted restrictions on foreign investment in these securities.

Government officials were not immediately available for comment. ($1 = 81.5540 Indian rupees)

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