sovereign guarantee for private placement program

Greenium is a concept that issuers would be able to realize cheaper funding, compared to traditional bonds, by issuing bonds specifically for environmentally friendly undertakings.

Landmark Judgements that Shaped India (Article + Mind Map) – From Prelims Sureshots! There is also the issue of India’s global bond index inclusion being postponed adding to the challenges.

The Monetary Policy Committee has been increasing the rates continuously.Indian investors, however, are yet to show sensitivity towards greener options, especially given the pricing. Most of the ESG (environmental, social and governance)- oriented investors, who are willing to pay a premium for such sustainable bonds, are from the development markets.This means that achieving a favourable premium is likely to be a difficult task. Meanwhile, the SGBs that the Indian governments are set to issue are expected to be rupee-denominated and issued in the domestic markets.Concerns over the strengthening dollar has reduced the new issuance of bonds in offshore markets.Capital is fleeing from the emerging bond markets due to the current international situation, added to by the US Federal Bank rapidly hiking its interest rates and the rising US treasury yields.Issuing SGBs help develop the private green bonds market.Investors are attracted to this instrument as it provides a cushion against risks associated with issuers defaulting and low transparency.They open up access to funds from a new category of investors.For the Indian government, these bonds could achieve a pricing premium of 15-25 bps more than the plain government bonds. SGBs offer better premiums and longer maturities.They serve as useful market signals, indicating that the issuing country is committed in its energy transition efforts.SGBs help countries finance undertakings towards the fulfilment of their obligations under the Paris Agreement framework.Important Personalities of Modern India (Article + Mind Map) – From Prelims Sureshots!

Sovereign guarantee for private placement program