NSE Indices, a subsidiary of the National Stock Exchange (NSE) has launched India’s first Sovereign Green Bond indices that will track the performance of Indian Sovereign Green Bonds issued recently by the government. The maturity dates for these indices, Nifty India Sovereign Green Bond Jan 2028 Index and Nifty India Sovereign Green Bond Jan 2033 Index, are January 31, 2028 and January 31, 2033, respectively. Both indices have a base value of 1,000 and a base date of January 27, 2023. The indices will be reviewed on a monthly basis.
These indices are expected to serve as a benchmark for asset managers and a reference index tracked by passive funds in the form of Exchange Traded Funds (ETFs), index funds, and structured products, allowing fixed income investors to gain efficient and cost-effective access to the Indian sovereign green bond market while also benefiting society. Following the auction of the sovereign green bonds, the Indore Municipal Corporation issued a green bond worth $2.44 billion in February 2023. Investors responded positively to the bonds which raised more than $3 billion.
The proceeds will be used to fund a 60 MW ground-mounted captive solar photovoltaic project in the Madhya Pradesh district of Khargone. Several corporate entities have also issued green bonds to finance clean energy infrastructure projects such as solar and wind energy. Following a review of the regulatory framework, the market regulator Securities Exchange Board of India recently issued a protocol for listing green debt securities in the context of growing interest in sustainable finance in India and around the world.
Recently, in February 2023, the Indian government concluded the sale of sovereign green bonds worth Rs 160 billion, with the second tranche raising Rs 80 billion. The second tranche included Rs 40 billion in bonds with a five-year tenor and a similar amount of bonds with a ten-year tenor. The five-year bond yielded 7.25 per cent, while the 10-year bond yielded 7.34 per cent. The Reserve Bank of India set the cut-off yields for the two bonds at 7.23 per cent and 7.29 per cent, respectively. On January 25, 2023, the first tranche of India’s debut sovereign green bonds worth Rs 80 billion was auctioned. The first installment paid out slightly more than the second.