Sovereign green bond issue of Rs 5,000 crore fails to enthuse investors

The Indian government’s seventh attempt at raising capital through a green bond failed to gather momentum as it received bids for only under a third of the INR 5,000-crore sovereign green bonds it auctioned. The remaining portion had to be absorbed by the underwriters. This contrasts India’s maiden green bond issuance, which saw oversubscription and a greenium, indicating a weakening of investor demand for this class of instrument.

What impact would this news have on corporations planning to issue green bonds? Moreover, how will investors perceive future sovereign green bond issuances? What measures could the RBI and the government take to refuel and channel investor appetite towards these bonds?