Sovereign Green Bonds – As of now the bonds are exactly the same as any other Govt bonds, but for investments in “Green Infrastructure”. Under the Paris Agreement, India has to be balance its Development and NDC (Nationally Determined Contribution) targets. Sovereign Green Bonds would help fund such projects.
You can read more about the framework about Sovereign Green Bonds here. The framework presently does not talk about any tax benefits or otherwise for the investors. This framework presently is only talking about why there is a need for SrGB.
Generally, SrGB’s are a hit worldwide, where in they have provided Tax SOPs for the investors. But no such provision has been made out in the present issuance of the SrGBs by the GOI (Govt of India). Pasting below the present issuance of the SrGBs right now and you can see that the indicative yields for these bonds are 7.31% for bonds maturing in 2033 and 7.17% for bonds maturing in 2028. When I checked the normal bond issuances, the yields are almost the same as that of SrGBs.
Finally, why should an investor invest specifically in these bonds? These bonds are said to have some impact on the ESG report of Corporations (if invested in these Bonds). From a retail investor perspective, as of now there is zero difference from investing in a normal bond. Let us hope the GOI will add some Tax SOPs to make this instrument attractive. In my opinion, any investor who wants to help India achieve its Paris Agreement goals can invest via these bonds.
I am watching closely if this bonds have good demand from the corporates. If that demand translates to better returns for the investors is something I am interested in.
