Credit ratings and research firm Sustainable Fitch has forecast India’s recently issued inaugural sovereign green bonds to be largely held by domestic investors that are “incentivised by the national climate policy to mobilise financing resources for green activities”. The report said that government’s sovereign green bond issuance looks to stimulate the domestic sustainable debt market through the encouragement of domestic investors’ more active participation in the green, social, sustainability and sustainability-linked bonds (GSSS) space. The Reserve Bank of India (RBI) expects sovereign green bond issuance will “ultimately provide a pricing reference for private-sector issuers to raise GSSS debt in local currency, which will in turn promote a greater capital flow into green projects”. Sustainable Fitch said: “We would expect project developers to use the momentum in the market and seek capital-raising directly from the domestic bond market. However, further structural changes are needed to improve financing conditions for project developers.” The Securities Exchange Board of India has also revised its framework for green debt securities, adding blue bonds, yellow bonds, and transition bonds. Blue bonds are intended to raise funds for sustainable water management and the marine sector, while yellow bonds are used to finance solar energy generation and the associated industries upstream and downstream. The revised framework also introduces additional disclosure requirements for green debt securities issuers, covering their environmental sustainability objectives, and their decision-making process for determining project eligibility.
— Regulation Asia (@RegulationAsia) February 9, 2023